PSEi rebounds from US election shock

THE LOCAL stock barometer firmed up on Thursday as Wall Street and regional markets got over the initial shock that America has chosen Donald Trump – feared by many investors for his isolationist and protectionist rhetoric – as the next president.

The main-share Philippine Stock Exchange index recouped 62.83 points or 0.88 percent to close at 7,181.87 as the previous day’s sell-off attracted some bargain-hunters. Elsewhere in the region, markets were all up as investors decided to give Trump the benefit of the doubt, hoping that he would espouse business-friendly policies.

In a research note on Thursday, Citigroup noted that the initial shock of the US election results was remarkably short-lived.

“The fear about trade protectionism and isolationist policies has been overcome by the hope of a large fiscal boost, reduced regulation and a break from the economic status quo,” Citi said. Furthermore, Citi noted that the probability of a December FOMC (Federal Open Market Committee) rate hike had recovered to 70 percent.

“We are surprised by the optimism that these market moves suggest. While we had anticipated a boost to markets from Trump’s fiscal spending plans, we expected the initial reaction would be much more cautious owing to the many unknowns, especially for emerging markets,” Citi said.

Citi thinks the outlook for emerging markets (EMs) remained challenging. “We also believe that the potential for geopolitical realignment raises risks for EM Asia, where the US military influence has for many years helped to maintain a balance of power that may now shift. We are thus not inclined to follow the market’s early optimism about a Trump victory. We would not rule out more market volatility as the Trump cabinet takes shape in the coming days and weeks.”

Jaime Dimon, chair and CEO of JP Morgan Chase, said in an internal note to global employees that after going through one of the most contentious elections in memory, “I’m optimistic about America’s future and the role our company will continue to play as we help the nation address our challenges and move forward together.”

“We are going through a period of profound political and economic change around the world, and American citizens showed that deep desire for change in voting to elect Donald Trump as the 45th President of the United States. We have heard through democratic processes in both Europe and the United States the frustration that so many people have with the lack of economic opportunity and the challenges they face. We need to listen to those voices,” Dimon said.

“Leaders from across the public, private and nonprofit sectors need to collaborate to find meaningful solutions that create economic growth and greater opportunity for all,” he added.

The chief of JP Morgan vowed to continue to help address the important public policy issues of the day and the underlying economic challenges throughout the world.

BPI Securities president Michaelangelo Oyson said that in the near term, markets could continue to be volatile with downside risk.

“The local market will likely follow the US lead as US investors differentiate between actual policies and political rhetoric. In addition, the risk of a Fed rate hike on December will add further pressure on markets,” Oyson said.

At the local market, all counters rebounded led by services which added 2.81 percent. Value turnover for the day amounted to P7.2 billion.

There were 135 advancers that overwhelmed 56 decliners while 45 stocks were unchanged.

ICTSI bounced by 5.42 percent while Metrobank gained 4.18 percent. SM gained 2.06 percent while URC, AC, PLDT and GTCAP all rose by over 1 percent.

On the other hand, Century Properties – which sizzled on Wednesday due to the company’s business affiliation with Trump – lost 12.5 percent to profit-taking on Thursday. Century has an upscale residential condominium project in Makati that carries the Trump brand.