PHILIPPINE Stock Exchange, Inc. (PSE) President and Chief Executive Officer Ramon S. Monzon has urged a 鈥渟wift鈥 and 鈥渃redible鈥 investigation of corruption allegations facing the government, warning they may do further damage to the country鈥檚 stock market.
Corruption allegations tied to government spending on flood control projects have triggered mass protests and fueled a broad exit by foreign investors. Global investors have pulled around $684 million from the market this year, according to Bloomberg-compiled data. By Friday, they had been net sellers for six days in a row.
鈥淯ntil foreign investors see clarity in the results of the investigation, they will continue to price in risks in our market,鈥 Mr. Monzon said in an interview with Bloomberg Television鈥檚 David Ingles and Annabelle Droulers on Monday. 鈥淎 swift, credible and all encompassing鈥 investigation and prosecution are 鈥渧ery important,鈥 he said.
The benchmark Philippine Stock Exchange index was among Asia鈥檚 worst performers on Monday, deepening declines for this year to more than 8% in a region where other gauges have zoomed to all-time highs. The Philippine peso also lagged other emerging Asia currencies on Monday, weakening 0.8% against the US dollar.
鈥淟ocal institutions are following the lead of foreign investors,鈥 Mr. Monzon said. 鈥淭hey鈥檙e going to await something significant or meaningful that can come out of these investigations.鈥
Philippine President Ferdinand R. Marcos, Jr. has created an independent commission to investigate the graft allegations, something that Mr. Monzon said was a bright spot for investors. He also pointed to the upcoming initial public offering of utility firm Maynilad Water Services, Inc. as another positive, saying that it had attracted foreign investors.
The fate of the hearings is uncertain, however, after Senator Panfilo M. Lacson said he as chairman of the Senate committee conducting the probe. Bishops in the predominantly Roman Catholic nation on Monday in the investigations.
At a briefing on Monday, Arsenio M. Balisacan 鈥 the secretary of the Department of Economy, Planning, and Development 鈥 said he hopes corruption issues in the Philippines will be temporary.
鈥淲e expect to come up with measures to improve governance of public spending,鈥 he said. 鈥淚f the short-term cost is compensated by much improved environment in the medium term and long term for investment, that鈥檚 not bad.鈥
The stock market has also been hit by bad weather, a perennial worry for Philippine investors. In September, a super typhoon in the country caused multiple deaths, as well as forcing work suspensions and mass evacuations. 鈥 Bloomberg
