Gov’t infighting shakes stability, worry execs

The worsening conflict among branches of the government underlined yesterday by a court holiday that was spontaneously made by members of the Judiciary and court employees had started to send jitters through the financial markets as investors see a brewing political instability with the Executive and the Legislative being pitted against the Judiciary.

First Grade Holdings managing director Astro del Castillo said “sparks are flying” and the rift between the Executive and the Legislative on one side and the Judiciary on the other, along with the declaration of a court holiday yesterday, has shaken the foundation of political stability and the market along with it.

He noted that the issue is now a concern, but hopefully it will not worsen. The other day, Castillo and other businessmen said they are monitoring closely the developments between the Executive and the Judiciary while saying that the market was still overlooking the friction.

What was affected strongly yesterday was the peso, which weakened to the 44 per dollar, Del Castillo said. The currency strengthened to 41 per dollar prior to the impeachment of Chief Justice Renato Corona.

He noted that the financial market, mainly the peso and the bonds markets, are more sensitive to such issues. He said the peso’s weakening yesterday was unusual since the peso is being buoyed by remittances from overseas Filipino workers (OFWs) during this time of the year.

The stock market, however, was not affected as much as concerns overseas were still the major mover for it.

For UBS executive director investment research and head of equity research Jody Santiago, said the court holiday was a minor factor in what is happening for the markets.

“Any uncertainty is negative for the markets. But effect was minimal because this is not a major crisis,” she said.

She also noted that the European crisis is still the overriding factor to the market.

Meanwhile, Santiago said the impeachment of Corona could take time away from economic reforms needed to shore up economic growth.

Though neglected, OFWs sending their money to relatives in the country is shoring up the peso during this time of the year.

Data from the Bangko Sentral ng Piipinas (BSP) show that the local currency is currently steady at around P43 and bankers expect the peso to be resilient in the face of global economic uncertainties due to the inflow of dollars from OFWs this month.

The figure is much favorable compared to the forecast made by the central bank early this year where the peso-dollar exchange rate was projected at P42 to P45 for 2011.

At that time, BSP Deputy Gov. Diwa Guinigundo said the central bank considered financial developments including dollar inflows, in making the projection.

True enough, the remittances will save the peso from the effects of the global economic turbulence this month as money sent by OFWs to their families in the country is seen to increase in the last quarter of this year.

Remittances for the last three quarters reached $14.8 billion, according to the BSP. It said the figure could be higher for the last quarter owing to increase in the number of OFWs.

Around 1.2 million job orders were reported to have been processed by the government this year, according to the Philippine Overseas Employment Administration (POEA).

Despite this, the government appears to be reluctant in pursuing the welfare of OFWs especially those who are facing serious cases in host countries.

The shares index, however, snapped almost a weeklong losses, rising by 6.28 points or 0.14 percent to finish at 4,282.62 while all shares also added 1.39 points or 0.04 percent to close at 2,971.47.

Four of the six subindices ended in the positive territory, led by Industrial rising by 1.0 percent. Mining and Oil, Holding firms and Financial rose 0.26 percent, 0.30 percent and 0.13 percent each.

Two sectors retreated — Property and Services at 1.11 percent and 0.14 percent, respectively.

Volume traded reached 1.31 billion shares valued at P4.22 billion.

Decliners trampled advancers, 97 to 56 while 50 stocks remained unchanged.

The local bourse defied the downtrend in the region, as Asian stocks dipped, after financial rating institutions Fitch Ratings and Moody’s warned that Europe may be slapped with lower credit ratings as crisis worsen. –Danessa O. Rivera and Mario F. Fetalino Jr., Daily Tribune