Was JDV’s Ouster cause of today’s decline in the Phisix?

We heard a comment that today’s market decline had been due to Philippine Congress House Speaker Joe De Venecia’s ouster.

While such reasoning looks plausible at the surface and likely fits a media news script, this seems more of an “after the fact rationalization” than a strong evidence of causal relationship. Why?

One, the Philippine market have been largely driven by foreign investors, whose concerns are on the political risks that may influence capital flows, think 2006 Thailand Capital Controls as an example.

Two, as shown recently, our markets has depicted a strong correlation with the activities in global markets (January 21 global stock market meltdown).

Lastly, past domestic political predicaments (Oakwood Mutiny, Hello Garci Scandal, Peninsula debacle etc.) have largely been discounted by the market.

Nonetheless, the interim trend indicates global equity markets have been on a downturn since its peak last October. The past two weeks of market clearing or technically driven rallies both in the US and the Philippines are likely to suggest of renewed test downwards. And yesterday’s decline in the US markets appears to impact the region anew.

This headline from Bloomberg “Asian Stocks Fall on Earnings Concern; Yamaha, Posco Decline” shows of today’s regional performance. So evidence is not ample to suggest of a domestic politics prompted performance.

Our view is that the macro trend has been a far larger determinant to the direction of the markets although domestic issues could serve as an aggravating circumstance.

Besides, event driven market actions are likely to be knee jerk in nature or don’t endure. Ask yourself, will you sell the market because JDV was ousted? Your answer will be self explanatory.

As for political risks, it would seem to me that JDV’s ouster was a calculated move in the part of PGMA. Why?

Signs of shifting winds of loyalty or its erosion as evidenced by the Speaker’s inability to contain his loose cannon son from implicating the First Gentleman in the ZTE scandal.

Maybe PGMA fears of a reprise of a Manny Villar scenario where the former speaker suddenly turned around and stealthily passed on an impeachment bill against former ousted President Joseph Estrada that triggered EDSA 2. So, in my view, the ouster was a preemptive strike to ensure her position.

Again, this is all about preservation of power based on personality based politics.

As a saying goes in politics there are no permanent allies or friends only permanent interests.