Market picks up speed along Duterte’s highway

Call it a technical rebound, if you wish, but the market’s move back to the 7,200 level last Friday could be its turning point. It might as well be the awaited sign—for local investors, most especially—on how the market should look at President’s Duterte’s gambit to jump-start the country’s development program.

The rebound broke the market’s nine-day losing streak. In the process, it also broke the traditional impression that market rebounds and advances were exclusively because of foreign investors’ buying initiatives.

Of note, foreign investors were net sellers of some P1.02 billion for the day. In total, local and foreign investors’ value turnovers were surprisingly almost split at 50 percent each on the back of a total market value turnover of P7.73 billion.

Last Friday’s rebound even becomes more significant when you look at foreign investors’ activities since trading resumed after the holidays. Foreign investors controlled 62 percent of total market transactions. In addition, they were net sellers by P4.37 billion. Yet, the market stopped itself from falling and turned around.

There were several reasons offered for the market’s turnaround, the most credible of which was that the rebound was purely the result of a technical play.

This meant the upticks in stock prices were the result of a change in investors’ perception rather than by a fundamental change in the actual value of stock prices. More precisely, stock prices have fallen really low, such that some investors are already chasing after them (or, in market parlance, bargain-hunting).

But the market’s rebound last week was not without any fundamental bases. Early reports have shown that corporate results for the third quarter were going to be strong, if not “better-than-expected.” In addition, the economy could also be reporting better numbers.

Extrajudicial killings

What is seen as the most critical factor that may stunt, if not totally block President Duterte’s government and its development goals, is its credibility to follow the rule of law—the biggest issue of which is the question on extrajudicial killings.

The inability of the police to solve and arrest the perpetrators of extrajudicial killings has increasingly given people the impression that the government may have actually adopted it as a state policy.

The government’s fast and transparent action to solve the death last Saturday of suspected drug lord Albuera, Leyte Mayor Rolando Espinosa Sr. may now be the needed break to debunk and finally put to rest people’s suspicions on its involvement in the controversial issue.

Espinosa and Raul Yap, another alleged drug lord, were reportedly killed by policemen in an alleged shootout inside the Baybay City Sub-Provincial Jail early Saturday.

Mr. Duterte’s critics were quick to say that Espinosa’s death was another terrible example of the dirty and inhuman policy of the government to get rid of the dregs of society. While swift and effective, it is definitely not acceptable, for the end does not justify the means.

The death of Espinosa is one good case the government could exploit to exonerate itself from suspicions on extrajudicial killings.

In other countries, extrajudicial killings are part of the natural dynamics in the war on drugs. But they could also be the desperate acts of people holding positions of power to cover up their illicit involvement in the illegal trade.

The drug trade has increasingly affected political exercises at the local levels in the country. It has spread, and even corrupted, the work of government functions like the police and military services and the judiciary as well.

Bottom line spin

Shakespeare once said to “fight fire with fire.” This must be the underlying reason why the market finally made a rebound last Friday amid the headline-hogging and investor-repelling war against drugs and criminality.

The government’s success in solving Espinosa’s death and its absolution in any wrongdoing should further bolster market confidence in the coming days.

Coupled with Mr. Duterte’s strong popular support and openness allowing critics to speak up, the market should be developing greater bullishness.

Add to this the healthy fundamentals such as the anticipated strong data on the country’s GDP and corporate results, the market is set for the seasonal Christmas rally.