BENGALURU: The Philippine’s peso and equities fell on Friday as investors weighed security and trade implications of Donald Trump’s return to the White House, while a US Federal Reserve rate cut buoyed other emerging market currencies and stocks.
Focus is also on the conclusion of China’s week-long National People’s Congress Standing Committee where investors are expecting further stimulus measures from Beijing.
Trump’s victory in the US presidential election has stoked fears that his threat to impose tariffs, especially those on China, would impact most emerging market economies which rely on China as their top trading partner.
Of particular concern for the Philippines, a country in which remittances account for a significant portion of its growth, is vice presidential candidate JD Vance’s proposal for a 10% tax on remittances.
“The country could be negatively affected the most from the immigration policy if Trump decides to pursue the mass deportation policy. However, Philippines could be less affected by the trade tension and could potentially benefit from the factory relocation as well,” Poon Panichpibool, a markets strategist at Krung Thai Bank said.
The Philippine peso declined 0.4%, while equities retreated 0.9% heading for a third straight day of declines. Shares were on track for the worst week since mid-June.
Most other emerging market equities advanced during the day, brushing off a fall during the US election night, after the US Federal Reserve delivered a widely expected rate cut on Thursday.
The Fed signalled a cautious and patient approach to subsequent easing, although analysts still widely believe another rate cut is still on the table in December.
“If the Fed continue to cut rate..... I would expect the EM FXs to regain some strength with some weakness in the US dollar. In this scenario, EM stocks could gain some grounds as well,” Panichpibool said.
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