Midterm polls to boost market

The local market was seen to benefit from the midterm elections this year, propelled in part by the increase in disposable income leading to higher margins for the consumer sector.

Local brokerage firm Philstocks Financial Inc., in a market forecast on Friday, said elections typically open more job opportunities that translates to increased disposable income that in turn lead to higher consumption.

As long as strong consumption is sustained, PhilStocks said the global economic headwinds such as the slowdown in US output growth, seen to take full effect in the coming months, should have limited impact on the local economy.

“Once, it (midterm elections) takes effect, it’s going to trickle down, again increasing disposable incomes and then increasing consumption. It’s still positive for the economy in 2019 despite the slowdown in the US economy. On the market, it will have an impact, but in the economy, it’s limited,” PhilStocks research associate Japhet Louis Tantiangco said.

Key stock indexes in the US closed sharply lower on Thursday, with the Nasdaq, Dow Jones Industrial Average and S&P 500 declining by 3.04, 2.83 and 2.48 percent, respectively, signaling a brewing market turmoil due to factors such as the Federal Reserve’s monetary policy stance and renewed US-China trade tensions.

Locally, the “bullish” character observed during election periods, manifest in consumer retail, media entities, transportation as well as communication counters in recent years.

Official campaign period for senatorial candidates and partylist groups for the midterm elections is set from 12 February to 11 May this year, with general elections set on 13 May, encompassing the first two economic quarters.

“Right now the Philippines is still driven by consumption, the number one driver of GDP (gross domestic product) growth. It slowed down the past year but since inflation is already tapering, we may see an uptick in consumption.”

The headline inflation for the month of December last year further eased to 5.1 percent from 6 percent in November, as announced by the Philippine Statistics Authority, lower by a hair than the Bangko Sentral ng Pilipinas’ anticipated 5.2 to 6.0 percent range.

Fourth-quarter data on the GDP, an indicator of economic growth, is set to be released on 7 January, Monday.

The benchmark Philippine Stock Exchange index closed the first week of 2019 trading with a 1.05 percent gain, up by 80.51 points to reach the 7,761.11 level on Friday. The broader all-shares index advanced by 0.92 percent, or 42.31 points to close at 4,652.59.

A majority of the indices moved into red territory on early trading, but quickly recovered in the afternoon following a substantially lower December inflation outcome.

The mining and oil index recorded the biggest gain of 2.25 percent, while the industrial index followed suit with a 2.14 percent gain to close at 11,249.91. Property was up by 1.88 percent, financials by 0.62 percent, holding firms by 0.49 percent and services by 0.42 percent.

Volume turnover stood at 1.958 billion, valued at P9.042 billion. Advancers led decliners, 141 to 63, with 39 issues unchanged.