WE saw them crawl back into the market three months ago, with a bit of boldness at first. Some turned jittery shortly before the May 9 presidential elections, but as they got to know the new CEO of the land better, they have since then regained control of the market.
The bulls have marched forward in a bigger way, not minding how expensive this playground has become relative to corporate earnings expectations, notwithstanding how a number of external risks loom in the horizon: Brexit (Britain’s exit from the European Union), a China slowdown, volatility in commodity prices, the US elections in November and, at some point, an increase in US Federal Reserve interest rates.
The newly invigorated bulls carried with them about P28 billion in net foreign inflows that fueled the post-election rally in the local stock market, overwhelming some P1.8 billion in net foreign buying prior to the polls.
What was previously a major overhang—-the country’s leadership turnover—turned into a positive catalyst as what historically happens during an election year. This was after Filipinos managed to pick a new President, long-time Davao City Mayor Rodrigo Duterte, in what was generally perceived as a clean, peaceful and orderly election. Mr. Duterte obtained 16 million votes, winning by a margin wide enough to dispel any doubts on the legitimacy of his mandate.
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At the same time, the country posted a 6.9-percent gross domestic product (GDP) growth in the first quarter. This made it the fastest-growing economy in the region, second no more to China. And finally, Mr. Duterte pledged governance reforms, a big increase in infrastructure spending to 5 percent of GDP, ease in doing business and other measures that could bring up the country’s growth trajectory and improve the lives of the people—all of which the market liked and calmed jitters related to continuity of governance.
Upbeat view
