Due to the nonstop killing of suspected drug traders, foreign investors don’t feel safe anymore doing business in the Philippines and have been pulling their investments out of the country. This is markedly evident in the Philippine stock market.
An article written by Ian C. Sayson and published in Bloomberg News stated that the scary environment had caused the brisk trading of Philippine stocks to stop.
The same article stated: “Equities in this Southeast Asian nation (Philippines), which soared to a 15-month high after Rodrigo Duterte won the presidency in a landslide election in May, sank sharply last month to cap the region’s steepest drop as the rule of law starts to disappear. The Philippine Stock Exchange Index has erased all the gains of its rally since Duterte took office in June.”
The same article also stated, “Philippine stocks rallied 33 percent from a January low through the July 21 peak as Duterte vowed to cut corporate taxes, relax business restrictions and ramp up infrastructure spending.”
But after a 12-week stretch of purchases, overseas investors have withdrawn $248 million.
Some investors speculate about the negative impact of Duterte himself has on the market due to the sharp increase in murders and no real arrests.
Duterte has also cracked down on major industries such as mining. The government’s audit of standards in the mining sector has led to shutdowns of several mines as Duterte seeks to ensure that all of them comply with environmental and welfare standards.
He later zeroed in on gambling, ordering a stop to online gaming that sent the shares of PhilWeb Corp. and Leisure & Resorts World Corp. slumping.
Investors took note that more than 2,000 people had been killed in Duterte’s campaign against illegal drugs. This has raised concerns from the United Nations, EU, US and even China and Japan and added to anxiety for investors.
“It’s unclear how the new President is going to behave going forward,” said Mark Mobius, executive chairman of Templeton Emerging Markets Group. Is Duterte going to keep his promise to kill 100,000 before he stops? Is he going to declare martial law if Congress and Court do not support him as he has threatened to do?”
From our standpoint, we see that Duterte’s unorthodox leadership style, combative stance, toughie language and oversensitivity to criticisms could further cause instability. With foreign investors shying from the country, the economy could considerably weaken and might collapse.
With such a grim scenario, radical groups could take advantage of it by staging widespread protest rallies. If these mass actions are suppressed, we could expect People Power Revolution III to be mounted, and this could oust Duterte from power.
President Duterte should change his ways of governing the country before it is too late.