Mutiny causes fall in RP stocks, currency

Mutiny causes fall in RP stocks, currency

Martin Abbugao, Agence France-Presse, Manila

Investor confidence in Philippines took a hit on Monday in response to the failed military uprising in the heart of Manila's financial district, with both the stock market and currency falling.

The swift and bloodless end to the mutiny late on Sunday may have mitigated the damage to the country's reputation but much hinges on how the investigation is carried out and whether the instigators are punished, analysts said.

As of 11:00 am (0300 GMT), the peso currency was trading at 54.363 to the dollar, down from its close of 54.010 on Friday. The key Philippine Stock Exchange composite index was down 2.49 percent.

In the country's eighth coup attempt in 17 years, elite soldiers seized a portion of the upscale Ayala Center in the Makati business district and demanded the resignation of President Gloria Arroyo and her defense minister before agreeing to return to barracks 22 hours later.

"Yesterday, we were relieved that the immediate crisis was resolved via negotiations and without bloodshed," said Guillermo Luz, executive director of the elite Makati Business Club.

"We had felt that going that route would have less negative impact on the country, but there's going to be a negative impact.

"We feel among other things (that) the Philippines' reputation has been damaged. There's a stigma once again and a reminder to people that this type of military action is possible within the Philippines and it's a scary lot."

Comparisons are being made with the 1989 coup attempt, in which rebel soldiers took over the same area in Makati for a week.

Aside from the deaths of 53 people, the rebellion 14 years ago set back the country economically by six years, officials said.

That rebellion, which nearly toppled then president Corazon Aquino, and six other coup attempts wiped out international goodwill gained following the ouster in 1986 of dictator Ferdinand Marcos in a "people power" revolt.

Analysts said the new revolt could push back the economy by one and a half years and limit the country's ability to grow faster than its official growth target of 4.3 percent for 2003.

"But four percent is not a very ambitious target. Ideally what we should like to do is to grow much faster than four percent. The longer term impact of the coup (is that) we may not grow faster beyond four percent," said Luz Lorenzo, an economist with ATR Kim Eng Securities.

Lorenzo said foreign investors were not fleeing, but were not investing either.

"It really is more of a standstill now rather than fleeing the Philippines. There is some reluctance to do anything at all. There is a wait and see attitude for now," she said.

Luz of the Makati Business Club said a return of investor confidence would rest on the government's handling of the investigation, citing precedents in the past when coup plotters went unpunished.

"We are really at the beginning of a problem and the rest of the damage will be dictated oby such things as the pace of which an investigation takes place, the scope and the thoroughness and credibility of an investigation and what actions are taken.

"There are many unanswered questions," he said, adding that any investigation must find out if the nearly 300 officers and enlisted mutineers had backers civilian and military backers.

"Clearly, logistics and support and money went behind them," Luz said. "I think this is a black mark on all of us collectively as a society, as a country," he said.

To restore investor confidence, Luz said: "I think we have to go into some sort of renewed efforts to fix this country. This is a country that needs a lot of fixing."