A Very Eventful Week: Philippine Elections And The Euro Bailout

``It's simple: when the utility of what you want (however you measure it) is less than the cost of the debt, don't buy it.” Seth Godin, Consumer debt is not your friend

The past two weeks have been quite eventful both in local and in international terms.

From an international perspective, we’ve been seeing the unfolding of the controversial political developments in Europe, which has apparently sent markets into steep pendulum swings.

From the local perspective, the culmination of the national elections has added to the ongoing optimism in domestic market activities as seen in the Peso and the Phisix.

And this seems to have partially created a divergence which has resulted to an outperformance (see figure 1).

Figure 1: Phisix Outperforms Global Markets

As to whether the Phisix and the Peso can sustain these divergences outside the sphere of global influence remains to be seen.

In the chart, fundamentally the undulations of the Phisix, has coincided with the actions abroad, i.e. the US S&P 500 (SPX), Europe’s (Stox50) and Dow Jones Asia (DJP1), as revealed by coincidental troughs from the Greece tremors last February (vertical line), aside from the sharp selloff during the other week which also signified as a sequel of the previous Greece episode (arrows).

Let me add that Friday’s selloff in the international markets have yet to be factored in the Phisix.

The point is, it would seem fallacious to assert that the local markets have been operating independent of global influence until last week.

Where the Phisix has broken out of the consolidation to a 25 month high last week, we can only discern that such buoyancy had been a consequence from the recent local elections.

All told, we have been validated anew that election jitters or risks had only been an exaggeration[1] apparently a figment of imagination of media and the politically obsessed groups.

Further, news reports where the nation was supposedly stunned[2] by the speed of election count only reveals of the backward orientation held by the public with regards to the current state of technological capability. Yet in today’s technology enhanced real time world, these returns, while fast, have not been impressive, or fast enough.

Nevertheless, the question in our mind is whether the Phisix will manage to sustainably diverge from the global markets, or if the current pressures seen in the global markets imply for a reversal, which may eventually affect the performance the Phisix.

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[1] Why The Presidential Elections Will Have Little Impact On Philippine MarketsPhilippine Markets And Elections: What People Do Against What People Say and

[2] Inquirer.net, Fast count stuns nation