COMPARATIVE ANALYSIS OF AQUINO AND DUTERTE

STOCK MARKET

Delos Reyes, Crizia Jane D.

Rosales, Louisa Mae

ABM 12-2M

Mr. Lyndon Dale Chang

Thesis Adviser
 I. Introduction

A year had passed since Rodrigo Duterte was elected as the 16th president of the Philippines.

Filipinos can’t help but compare today’s administration to the previous administration that was

led by the former President Benigno Aquino III. During the campaign season, President Duterte

caught the attention of the Filipinos with his plans in eradicating criminality and drugs in the

country. Filipinos were interested in President Duterte’s policies about security, development in

health, education, livelihood and shelter, and fair access when it comes to decision-making.

Former President Aquino’s platform is about good governance which focuses on reducing

poverty, social protection, corruption in the government, disaster risk reduction, health, and

education.

According to Sioson (2016), President Duterte had a net rating of +64 which showed that 76

percent of the Filipinos were satisfied with Duterte’s performance compared to the former

President Benigno Aquino III’s +60 net rating. In the latest Social Weather Stations (SWS)

survey released in October 2016, President Duterte and the former President Aquino had a “very

good” satisfaction rating for their first three months of service as the president of the Philippine

during their respective terms.

President Duterte has been serving the country for more than a year. Filipinos are giving

praises and criticisms in President Duterte’s performance. A lot of comparisons have been made

by the Filipinos when it comes to the performance of President Duterte and former President

Aquino in the year. One of the concerns of the Filipinos is the economy. The Philippines is the

top-performing economy in Southeast Asia. It is also the fastest-growing economy among 11

selected ASEAN economies, outpacing expansions in China (6.7 percent), Vietnam (5.5

percent), Indonesia (4.9 percent) and Malaysia (4.2 percent). It ranked 10 in the fastest growing
economy in the world in 2017 (De Rivera, 2016). The stock market rating also affects the

economic growth of the Philippines. A stock, also known as common stock, is a security that

represents small ownership in a business that trades in a stock market. A stock market refers to

the place where buyers and sellers gather to trade goods. In the Philippines, PSE or Philippine

Stock Exchange is the only corporation that oversees and governs our stock market.

II. Background of the Study

Financial development in the Philippines and different nations is ascertained as the percent

change in the GDP starting with one year then onto the next. It gauges whether generation has

expanded or diminished, and by how much. The Philippine Stock Exchange, Inc. is the national

stock exchange of the Philippines. The Philippine Stock Exchange Composite Index (PSEi) is a

major stock index, which tracks the performance of the most representative companies listed on

the Philippine Stock Exchange. Its’ primary function is to support the growth of the industry and

the commerce of the country. That is the reason why a rising stock market is the sign of the

growing economy of the country. It is also considered as the common platform for the buyers

and sellers of these stocks that are listed in the stock market. When a company needs to raise

money, it issues shares. If someone buys a share then that person has a piece of the company

where he/she bought the shares. (Share Tips Info, 2017)

According to Investopedia, a stock market refers to the gathering of business sectors and

trades where the issuing and exchanging of values (loads of openly held organizations),

securities and different sorts of securities happens, either through formal trades or over-the-

counter markets. The stock market can be divided into two: the primary market and secondary

market. The primary market is the place new issues are first sold through Initial Public Offerings
(IPO). Institutional financial specialists normally buy a large portion of these offers from venture

banks; the value of the organization "going public" and the measure of offers being issued decide

the opening stock cost of the IPO. All subsequent exchanging goes in the secondary market,

where participants incorporate both institutional and individual investors, (An organization

utilizes cash raised from its IPO to develop, however, once its stock begins exchanging, it doesn't

get stores from the purchasing and offering of its shares). There is a wide range of players related

to the stock market, including stockbrokers, merchants, stock investigators, portfolio managers

and investment bankers. Everyone has their different roles but they are connected and rely on

each other to influence the market to run effectively.

III. Review of Related Literature

Stock Market in the Philippines

A stock, also known as common stock, is a security that represents small ownership in a

corporation. A stock market is a place where stocks are bought and sold by buyers and sellers. A

shareholder or a stockholder is the part owner or the one who invests in a stock of a particular

corporation. People buy or invest in stocks to benefit from a company's value potential over time.

As a shareholder, you can participate in the company’s growth and success through stock price

appreciation and by earning dividends. Investing in a stock can give greater returns than most

investment instruments. It also compounds the value of your investment. The Philippine Stock

Exchange (PSE) is the only corporation that governs our local stock market. The PSE is overseen

by a 15-member Board of Directors, chaired by José T. Pardo. The exchange was created in 1992

from the merger of the Manila Stock Exchange and the Makati Stock Exchange. The main index

for PSE is the PSE Composite Index (PSEi) which is composed of thirty listed companies. The
PSE has recorded magnificent high ratings starting the third quarter of the couple years.

Financial analysts also have been saying positive feedbacks about the impressive growth of the

stock exchange in the country together with the performance of Peso and the economy as a

whole (Dungo, 2017).

Comparison of Aquino and Duterte’s Stock Market

The transition from Aquino administration to Duterte administration gives us the opportunity

to compare the two presidents in terms of their performance and accomplishments. The two

presidents have different policies and platforms and way of solving issues in the country.

President Duterte’s platforms include anti-drugs, anti-crime and anti-corruption and his policies

are about security, development in health, education, livelihood and shelter, and fair access when

it comes to decision-making. Former President Aquino’s platform is about good governance

which focuses on reducing poverty, social protection, corruption in the government, disaster risk

reduction, health, and education.

On June 2010, the inauguration of former President Aquino, the benchmark Philippine Stock

Exchange index (PSEi) slightly dipped by 0.18 percent. The market was undecided what to

expect in the six years ahead but two years later Philippine equities were outperforming every

other stock market on the planet. Midway through Aquino’s term, 2013, the PSEi had grown

over 120 percent. The Philippine Stocks started from 3, 300 points and ended to 7, 300 points.

On May 2016, 2013, the PSEi had reached the high point. Aquino maintained the results of the

PSEi during his term and had 8,127.48 points in the Philippine Stocks in April 2015 and left

Duterte with a strong economy (The Manila Times, 2014).

2.8 percent lower than its 7,796.25 close when Duterte took his position in the office on June 30.

The 100 days following the inauguration of former President Benigno Aquino III, on the other

hand, witnessed the PSEi rise by 929.79 points or 28.05 percent to 4,245.05. The stock market

supposedly benefited from improving macroeconomic conditions (Mariano, 2016). The peso has

depreciated more than 6 percent against the U.S dollar since Duterte assumed the presidency, the

worst performing emerging market Asia currency. Philippine stocks have seen near-zero growth,

making the nation’s benchmark index the worst performer among major markets in Asia.

(Sayson & Aquino, 2017). Until now, Duterte has been experiencing a rough ride for equity

investors. According to Macaraeg (2017), in one year performance of President Duterte and

former President Aquino, the Philippine Stocks only gained 0.6 percent to Duterte in a year

compared to Aquino’s 27.2 percent gain in the Philippine Stocks but last July, the stock market

had increased after Duterte’s first State of the Nation Address or SONA, last July 25, 2017.

According to reports, no administration has seen an increase in the stock market. It’s been the

first time in more than 24 years of SONA history. The last time the stock market had increased

was during the first day of SONA of former President Fidel V. Ramos in 1992. As the PSEi

closed on the first day of SONA of Duterte, the local index closed higher by 0.3 percent to 8,049

just an hour before the President began his speech (Ramos, 2017), but recently, September 14,

2017, Thursday, the stock market hit new record highs with analysts noting continued investor

confidence ahead of the end of the so-called “ghost” month. The Philippine Stock Exchange

index (PSEi) gained 1.13 percent and broke past the 8,100 resistance level to close at 8,144.91, a

new all-time high. The previous record of 8,127.48 was set more than two years ago on April 10,

2015 (Ballesteros, 2017).

In his 20-minutes speech at the La-Consolacion College, Former President Benigno Simeon

“Noynoy” Aquino III discussed the Philippine Economy. Aquino talked about the growing

economy of our country and how it is performing well. According to the president, the world

market recognizes the strengthening of the peso and the gross international reserves have reached

an all-time high of $52.3 billion on September 20, 2010. Aquino also said that the Philippine

Stock Exchange index reached an all-time high again at 4,196.73 points that surpassed the 4,000

points that seemed impossible. This just shows the confidence in our company, government and

in our people (Sisante, 2017) Meaning, if the PSEi reached this level, the investors trusted the

capabilities of the President and the economy is sailing smoothly. According to Aquino, the PSE

is now counted among the best stock markets in Asia. While our peso grows stronger, our

economy improves, and the prices of goods remain steady. We are truly ready for progress. The

Business leaders gave him ‘high marks” for his performance on his first 100 days. (Presse, 2010)

This just means that the leaders were confident about how President Aquino was running the

country. This trust was also caused by the rise of the peso to 2-year highs against the dollar. The

Peso-Dollar rate appreciated by 6.8 percent in his first year and the PSEi was up by 27.2%.

While this was happening, the prices of the goods remained the same. (Macaraeg, 2017)

On the other hand, President Rodrigo Roa Duterte experienced a wild ride in his first 100

days. This is because of the campaigns that he wanted to focus on. When the administration

marked its 100th day on Friday, the Philippine Stock Exchange index (PSEi) stood at 7,578.29,

217.96 points or 2.8% lower than its 7,796.25 close when Mr. Duterte assumed the presidency on

June 30. In the currency market, the peso has weakened P3.215 or 7.13% against the dollar. This

The local unit’s value stood at P48.30 against the greenback, compared with the P45.09
exchange rate 100 days ago. This just shows that 100 days after Duterte won the presidency, the

peso failed miserably. The peso failed to mirror its P3.19 or 6.86% advance to P43.30 against

the dollar under the Aquino administration (Mariano, 2016). From the administration of Aquino,

Philippines was considered as one of the fast-growing economies so The World Bank expects

economic growth to accelerate to 6.4 % this year, and according to the country’s board of

investments, overall investment commitments have soared 200 %, to 51 billion pesos, from 17

billion last year. However, when President Duterte took the office, the Philippine Stock

Exchange (PSE) reached its’ lowest point and the Philippine peso has weakened in value against

the US dollar by 6.8% resulting in the uncertainty of the investors (Wagner, D.& Tupaz, E.,

2017). Standard and poor referred to the President's flighty and vague strategy motions as a

continuous concern and has delayed making advance positive figures for the economy, in spite of

the fact that the rating office has, for now, held the nation's investment grade. The Philippine

Stock Exchange Index has dropped 2.8 percent since the day before Duterte's June 30 initiation,

the main decliner among significant Asian gauges and trailing an 11 percent progress in the

MSCI Emerging Markets Index. It's the poorest showing for another pioneer since stocks

dropped 31 percent in 1998 in the initial 14 weeks of the administration of Joseph Estrada.

President Duterte was positively looking forward to making the country’s economy but then it

was set aside because of his Anti-drug Campaign. Local and Foreign investors backed out

because they were uncertain about Duterte’s plans in the country. According to Hans Goetti,

“Duterte is unpredictable and anything that’s unpredictable is negative, the worst thing for the

markets is that they don’t know what they are dealing with.” The PSEi went up only by 0.6 % in

his first year (Social Patrol, 2017).

The transition from Aquino administration to Duterte administration gives us the opportunity

to compare the two presidents in terms of their performance and accomplishments. The two

presidents, Aquino and Duterte, had different platforms, policies, and way of giving a solution to

an issue in the country. One of those is the stock market rating of the Philippines. A stock, also

known as common stock, refers to a security that represents small ownership in a business or

corporation which is sold in a stock market. A stock market is a place where stocks are bought

and sold by buyers and sellers. During Aquino’s term, the benchmark Philippine Stock Exchange

index (PSEi) slightly dipped by 0.18 percent but after two years, Philippine equities were

outperforming every other stock market on the planet. Aquino left Duterte a good economy with

a stock market rating that reached the high point of PSEi with 8,127.48 points. President Duterte

had experienced a rough ride through the investors when he assumed the presidency. President

Duterte has focused on eradicating drugs and criminality in the country rather than the economy

of the Philippines. But recently, Duterte was able to reach 8, 144.91 points as of September 2017

higher than Aquino’s 8, 127.48 points last April 2015 (Ballesteros, 2017).

During the Aquino's administration, President Aquino wanted the economy to grow that will

benefit all including the poor and not only the ones who are already rich. On his first 100 days,

he already accomplished a lot that made the Philippines recognized a bit by the world like the

strengthening of the peso, the PSEi increased. Take note, these achievements happened during a

crisis. There was a Manila hostage incident wherein eight Hong-Kong tourists were killed but the

economy of the country was still doing good. This just means that even that a crisis happened,

our country was able to survive even if a lot of investors pulled out their investments. Despite

these, a lot of investors still believed on how President Aquino was running the country. In fact,
the businessmen gave Aquino high marks for his performance in his first 100 days saying that

President Aquino was able to plant confidence in our economy through yielding tens of

thousands of new jobs and better economic growth prospects. Therefore, Aquino did a good job

on his first 100 days despite the problems that he encountered. Over the 6 years of his term, he

was able to deliver well and was able to make the PSEi higher.

While President Duterte who focused on his Anti-Drug campaign caused a lot of stir both

locally and internationally. He said that he will leave the businessmen alone and focus on his

campaign. These made the businessmen happy but later on upset. A lot was upset because of his

campaign including former President Barrack Obama, The United Nations, and the European

Union. The western government were alarmed because of the killings and was also alarmed

because of the violation of human rights. Because of his campaign, a lot of investors withdrew

their investments because they are not certain about what will happen to the economy of the

country if this continues. They cannot predict what Duterte will do in the future and anything

unpredictable is negative. Because of this, the peso has weakened in its value against the US

Dollar. The performance of the stock market from the June 29 close through Thursday compares

with a 26 percent increase when Benigno Aquino took his position in June 2010 and a 16 percent

advance in 2004 when Gloria Macapagal Arroyo won her own six-year term. The peso weakened

2.6 percent since the end of June which was the worst performance in Asia after Malaysia’s

ringgit. Philippine shares have long been some of the most expensive in Asia and their decline

from late July came as the gauge’s 12-month price-to-earnings ratio rose to 19.6. It’s since

dropped to 18.1, still higher than Indonesia’s 15.8 and Thailand’s 14.5. (Sayson & Aquino, 2017)

In Duterte’s first 100 days, it is said that he is still in the “honeymoon stage” when it comes to
the stock market. There are conclusions to be drawn but it’s still early to conclude for it still

uncertain on how Duterte will run the country.

Still, President Rodrigo Duterte has more years to improve and make changes in his

decisions. Duterte has less than 5 years to make his move. The PSEi may not be in good

condition during the first 3 months of his term but Duterte was able to give it an increase last

September 14, 2017, which had beat the all time high stock market rating of Aquino last April

2015. We, Filipinos, should hope that this good news would be maintained by our President,

Rodrigo Duterte, in his remaining years. More days, months and years are coming and a lot of

improvements may happen in Duterte’s term as a President.

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