There’s blood in the streets
There’s blood in the streets, not just in Metro Manila but in Marawi City.
Friday woke with gunshots at the Resorts World Manila, on the reclaimed area around the Mall of Asia complex, near the Ninoy Aquino airport. The bad dream was replayed by the CCTV videos — hysterical gamblers frantically scurrying away as a hooded man in all-black with a backpack, toting a baby machine gun fired in the air and then torched the casino’s main game room on the second floor.
He scooped up P113 million ($ 2.3 million) worth of gambling chips, had a brief encounter with hotel security, and clambered up the stairwell to the fifth floor, where he rushed into Room 510.
Resorts World Security counted 38 fatalities of suffocation from the smoke, including the gunman who they said doused himself in gasoline, lit himself up and then shot himself ( Reuters, 05.02.2017). Thirteen of the dead were employees of the casino while the rest were guests. Scores were wounded in the stampede ( Ibid.).
“All indications point to a criminal act by an apparently emotionally disturbed individual,” Presidential Spokesman Ernesto Abella told a news conference ( Reuters, 06.02.2017). National Security Adviser Hermogenes Esperon said it was plain robbery ( Ibid.).
Philippine President Rodrigo Duterte, however, made no mention of the Resorts World attack when he peptalked wounded soldiers Friday in Mindanao ( Associated Press, 06.02.2017). An air strike to drive Islamist rebels out of Marawi had mistakenly killed 10 government troops, and wounded seven others Wednesday last week when one of two air force SF- 260 close air support planes misguidedly dropped bombs on their own troops on the ground ( Newsweek, 06.01.2017).
“I will no longer accept secondhand military equipment from the US,” Duterte quickly announced. He said he would acquire new and modern weapons systems “even if I have to spend double the money,” from China and Russia, traditional rivals of the United States ( reuters.com, 06.02.2017).
But why is the President so uncharacteristically mum on so shocking an incident as the Resorts World attack? Duterte has been pointing to the IS ( not the Maute rebels, he now says) as the perpetrators of the conflict in Marawi that forced his hand in the declaration of martial law in Mindanao on May 23, just more than a week before the Resorts World attack. On the Mindanao conflict Duterte is convinced: “It’s purely ISIS ( inquirer. net, 06.01.2017).” What now to say about the terrifying assault in Manila?
Maybe he was just protecting the stock market and the Philippine peso.
Shares in Resorts World owner Travellers International Hotel Group, Inc., a joint venture of the Philippines’ Alliance Global Group, Inc. and Genting Hong Kong Ltd, fell 7% on June 2, as major TV networks covered the Resorts World attack whole day and night ( Reuters, 06.02.2017). The benchmark Philippine Stock Exchange index (PSEi) succumbed to negative sentiment, closing 0.25% lower or 19.83 points to 7,907.66. The broader All Shares index was down 0.3% to 4,716.13 (PDI 06.03.2017). The Peso ended at 49.511 as of June 2, -. 228 -.46% ( bloomberg.com, 06.02.2017).
Yet Jefferies, a 55- year- old American global investment bank declared barely two weeks after martial law was declared in Mindanao ( and a day before the Resorts World attack): “Despite worries about the politics of Philippines’ President Rodrigo Duterte, the Filipino stock market has enjoyed a populist rally and inflation is a tailwind ( Emerging Markets Daily, barrons.com, 05.31.2017). The iShares MSCI Philippines exchange- traded fund is up nearly 13% this year, versus the iShares Emerging Markets Asia ETF up nearly 23% and the iShares MSCI China LargeCap ETF up nearly 16%. A little lagging but running with the herd, with investors “modestly bearish on Philippines equities within a global asset allocation ( Ibid.).”
Analysts seem to think that Philippine financial market would be affected more by external factors, particularly the US real interest rates and real bond yields, and generally, global economics, than the unstable sentiments for Duterte’s policies and style. What to watch for is domestic inflation which has moved from 2.3% year on year to 3.4% year on year. If the peso were to weaken further, rising imported costs would fan inflation more (Ibid.).
Yet a net inflow of hot money worth $ 181.06 million was posted during the week that the government announced lowerthanexpected first- quarter economic growth, as external developments pushed portfolio investors to emerging markets like the Philippines ( PDI 06.03.2017). Gross domestic product (GDP) grew 6.4% in the first three months of the year, below most forecasts and the government’s expectation of 6.7% ( Ibid.).
Of course hot money is volatile, and an undependable indication of market confidence.
Four successive weeks of hot money pull- out pummeled the market in uncertainties over the controversial closure and sanctioning of mining firms in the short- lived ( unconfirmed) term of Gina Lopez as Energy Secretary ( PDI, 03.11.2017). Still, data from the Bangko Sentral ng Pilipinas ( BSP) for the period May 15- 19 showed $ 437.92 million worth of inflows exceeded the $ 256.86- million outflows ( Ibid.)
The easy explanation: investors are greedy, and riskinclined, following billionaire investor Warren Buffett’s advice: “Be fearful when others are greedy, and greedy when others are fearful.” ( marketwatch. com, 02.17.2017) He learned from Baron Rothschild, an 18th century British nobleman and banker, who said that “the time to buy is when there’s blood in the streets ( Forbes, 02.23.2017).”
There’s blood in the streets. Not just figuratively but actually. Not just in feisty Marawi, but in blasé Metro Manila. n