Good times ahead seen as election fever sets in

Election fever is expected to set in later this year, when presidential candidates start to rev up their campaigns.

President Aquino, whose term was marked by some economic success as seen in the rapid economic expansion over the past five years, investment-rating upgrades and increased business confidence, will step down in the middle of 2016.

Interviews with market analysts indicated that the run-up to the elections is generally a good time for corporations, especially those in the consumer and media segments, as politicians open their wallets during this primary exercise of democratic tradition.

Investors are also expected to watch the candidates closely for indications of which industries would benefit the most—or the least—given the biases each may have toward a specific business sector or issue, an analyst said.

Mike Oyson, CEO of BPI Securities, said that it was still “early days” but he did note that the election period and its results would determine whether the benchmark Philippine Stock Exchange index can achieve even loftier valuations.

“Investor perception is key in sustaining the performance of the stock market,” Oyson said in an email.

Manuel Cruz, strategist at Asiasec Equities Inc., said the full effect of the election season would be felt by businesses in the fourth quarter of 2015, when individuals seeking the highest political office file their candidacies.

“Elections will be an added boost to the market as investors are usually bullish during the pre-election period. Consumer and media-related stocks are the biggest beneficiaries during elections,” Cruz said in an email.

Manuel Lisbona, deputy head of PNB Securities Inc., shared the same view, noting that the 12-month period before the actual voting “is usually good for the market given the effects of election spending. Stocks that operate in the consumer space usually benefit.”

“In addition, foreign fund managers and investors pay close attention to the presidential candidates, particularly the frontrunners,” Lisbona added in his email.

“They watch for clues on the candidates’ position/perspective on issues that affect their investments, such as foreign investment limitations in terms of ownership or areas of investment like mining/natural resources,” he said.

April Lee-Tan, research head at COL Financial Group Inc., noted that despite risks, how investors behave will mainly depend on the economic factors and corporate growth indicators at that time.

“The market could consolidate, or stay sideways, in light of the concerns on elections. However, assuming the economic growth and corporate earnings growth stay strong, we think that the market will continue to go up,” Tan said in an email.

“Also, we think that there is a greater likelihood that the economy will do well because of the favorable demographic trends, resilience of BPOs [business process outpouring] and OFW [ overseas Filipino worker] remittances—factors which are difficult to reverse,” she said.