Philippine market rallies anticipating Estrada resignation

The peso and the stock market posted gains amid growing confidence that the political situation will soon be resolved.

At the stroke of twelve noon, as the closing bell was ringing at the Philippine Stock Exchange, applause from brokers reverberated throughout the trading floor in Makati: The day's final transaction had lifted the Philippine Composite Index (Phisix) to 1,500.10, up 212.25 (+16.48%, the largest single-day gain ever), supported by a strong trading volume of Ps3.8 billion ($74.8 million).

This exhilarating single-day rise came in the wake of a three-day holiday, and on a day when market players generally expected the peso and the stock market to take a dive.

Last Saturday, an estimated 40,000 people joined a rally in EDSA, the country’s symbolic site where the People Power against Marcos started. The rally was attended by Cardinal Sin, former president Cory Aquino, and several prominent politicians and businessmen.

The market’s jubilance seems to be in anticipation of a quick resolution of the allegations against Estrada (that he received illegal gambling payoffs). The market anticipates Estrada will resign under pressure.

Over the Philippine holidays, the Senate President, the Speaker of the House and several lawmakers resigned from Estrada’s LAMP party.

Mar Roxas, the trade secretary resigned last week. Four business leaders also resigned as members of the council of economic advisers.

The opening transaction lifted the Phisix to 1371.01, then at around 11am it reached an intraday peak of 1511.52 before closing the day at 1,500.10.

The peso recovered from its spiral last week with a midday average weight of Ps49.219 to the US dollar, with a midday volume of  $80.5 million compared to the closing average weight of  Ps51.680 on October 31.

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