Market Overview

Philippine Stocks Are Underperforming Amid President Duterte's Controversial Rule

Philippine Stocks Are Underperforming Amid President Duterte's Controversial Rule

Rodrigo Duterte has been serving as the president of the Philippines for less than four months now, but he has already managed to make a name for himself internationally. The head of state made headlines on the back of his firm-hand-approach to the War on Drugs, controversial statements against a series of prominent figures and entities — from Barack Obama to the U.N., and a comparison he made between Adolf Hitler and himself, among several other scandals and mishaps.

Most recently, the leader declared a military and economic "separation" from the United States. He then clarified he was talking about "separation of foreign policy,” but the comments still caused concern among those industries that rely largely on the U.S. market, especially those (like call centers) providing services to U.S. companies. Others, downplaying the importance of Duterte’s words, argue the country can build stronger relations with other countries, without cutting ties with the United States.

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However, the Filipino president is not only upsetting the United States, but also other important allies like Japan, the main investor in the country. Breaking with tradition, Duterte decided to pay an official visit to China before touching base with the United States. This decision was not only a snub to the United States, but also to Japan, as the president had originally said he would visit Tokyo in his first official trip outside the ASEAN (Association of Southeast Asian Nations) region.

Filipino Performance

Since Duterte took office as president on June 30, the Philippine peso lost almost 2.6 percent of its value against the U.S. dollar.

Indexes like the Dow Jones Philippines Index (USD) (INDEXDJX: PHDOWD) lost about 3.5 percent, while ETFs like iShares MSCI Philippines Investable (NYSE: EPHE) tumbled by 6.85 percent.

Finally, the Philippine Stock Exchange PSEi Index has dropped 2.4 percent since June 30.

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Disclosure: Javier Hasse holds no interest in any of the securities or entities mentioned above.


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