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."