Duterte fever

THE Philippine stock market, already trading at a high value, jumped, the peso advanced and now US Index provider MSCI has increased the Philippines’ weightage while reducing Malaysia’s, Thailand’s and Indonesia’s.

So, unlike what some had feared, the emergence of Rodrigo Duterte ( pic) as the Philippines’ outspoken President-elect is far from freaking out the markets. To be sure, these developments are not necessarily a resounding endorsement of Duterte, described by the Economist as “a loudmouth pursuing a wildly populist campaign” and someone who opines that things like “due process” are for wimps.

On Friday, though, the Philippine stock market reacted even better as the world got a clearer idea of Duterte’s economic agenda, which up till then, had not been well-articulated. Foreign funds have started jumping in on this news.

Duterte’s camp vowed to continue to maintain current macro-economic policies set by outgoing President Benigno Aquino’s administration. According to some reports, this reduced the continuity risk earlier priced in by investors.

Duterte’s camp also pledged to accelerate infrastructure spending and vowed to address the restrictive economic policies in the constitution. The jury is still out on what’s in store for the Philippines, which is now going to be in the hands of someone who has promised to shut down Congress if it ever tries to impeach him.

It will be interesting to watch Duterte’s leadership and what that will do for business and investment there. Any significant changes in the climate there will impact neighbouring countries, including Malaysia. If he gets it right, he could make the Philippines more attractive in drawing investments and that could be at the expense of Malaysia.

On the other hand, there are concerns the old Philippine elite could regroup to frustrate Duterte, inviting political chaos. In other words, watch this space.