Next job of Philippines' new president is winning over investors

Mr Rodrigo Duterte gestures as he is interviewed by reporters at a hotel in Davao City, on May 9, 2016.
Mr Rodrigo Duterte gestures as he is interviewed by reporters at a hotel in Davao City, on May 9, 2016. PHOTO: AFP

MANILA (Bloomberg) - After defeating his opponents in a heated presidential election in the Philippines, Rodrigo Duterte is seeking to calm markets with a call for "healing" as he seeks to win over Filipinos and investors watching closely for how he will manage the economy.

"Past days have been virulent, I'd like to reach my hand to my opponents," Duterte, 71, said in a briefing in Davao City after Monday's (May 9) voting. "Let's begin healing now."

He claimed victory after preliminary results showed he secured about 39 per cent of the vote, and named some potential cabinet members.

The early response from markets was a positive one. The peso strengthened against the dollar and all its major Asian peers. The Philippine Stock Exchange Index rose for the first time in three trading sessions, bucking the trend for emerging- market equities that extended their longest slide this year. Volatility in local shares will persist as investors gain familiarity with Duterte, according to the Bank of the Philippine Islands.

"There will be a honeymoon period moving forward as investors give Duterte the benefit of the doubt," said Smith Chua, who helps manage about US$10.6 billion (S$14.5 billion) as chief investment officer at the nation's second-largest money manager.

"His popularity is very resounding and investors are interested to see what he will do with this strong popularity and how he will conduct peace with other parties and run government."

The country's influential Makati Business Club on Tuesday (May 10) praised the Commission on Elections "for its management of a process, seen by many as highly credible, clean, and honest," news website Rappler reported. It added that it was "ready to be an active and participative partner of government in ensuring sustainable and inclusive growth that benefits not just a select few but all Filipinos."

The peso rose 0.4 per cent to 46.89 per dollar as of 11.48am in Manila, prices from the Bankers Association of the Philippines show. The currency has strengthened more than 1 per cent from a two-month low reached Friday.

The benchmark stock index gained 0.5 per cent. Local markets were shut Monday.

The country's dollar-denominated bonds due in 2041 advanced for a fourth day, sending the yield down three basis points to 3.26 per cent, according to Bloomberg Bond Trader prices.

Uncertainty about Duterte's economic plans and his lack of policy-making experience had sent investors to the sidelines in the weeks before the election.

Duterte told reporters on Monday he may appoint Carlos Dominguez as finance chief or to head the transport department. Dominguez was agriculture secretary in the cabinet of late President Corazon Aquino. He owns Marco Polo Hotel and is a childhood friend of Duterte.

"We're looking for an administration that will have continuity - almost seamless - particularly in infrastructure," John Forbes, senior adviser at the American Chamber of the Philippines, said in an interview with Bloomberg TV's Haslinda Amin.

"The first challenge is going to be infrastructure because the growth of the economy has produced much more demand on roads and airports and seaports."

Once labeled Asia's "sick man," the nation of 101 million people has earned World Bank praise as the continent's "rising tiger" under outgoing leader Benigno Aquino III. It posted average annual growth of 6.2 per cent over the past six years, the fastest pace since the 1970s.

Despite those gains, poverty rates remain high and Duterte tapped rising discontent among millions of voters who feel they haven't benefited from Aquino's reforms. Faster growth and 4 million jobs created during Aquino's six-year term led to record car sales, but also clogged up Manila's already gridlocked roads as infrastructure spending failed to keep pace with economic expansion.

Duterte has been making positive signals to investors. He told online news website Rappler in an interview published on Monday that he will consider raising the 40 per cent foreign ownership limit in certain industries to win over investors. He also pledged to work with countries in the region to boost trade.

"Our mayor has been successful in making Davao investor- friendly," Bonifacio Tan, president of Davao Chamber of Commerce, said in an interview.

"The mayor really does what he says. The mayor may be a bit emotional, when he speaks, when he gets mad, he sometimes expresses foul language. The way he talks does not show the real government official he will be."