Market's best bet: Guilty verdict vs Erap - analyst

A guilty verdict on the P4.1-billion plunder and perjury cases against former President Joseph Estrada will be best for Philippine markets, as this will lead to less problems for the current administration, an analyst told GMANews.TV on Wednesday. The country’s anti-graft court is expected to release its much-awaited decision today. “A guilty verdict is the market’s best bet. This may lead to people power, but this can be easily addressed by the current administration, which has the full support of the police and military," said Jose Vistan, lead researcher at AB Capital Securities. “With an acquittal, you are setting Erap on the loose. This will lead to a stronger opposition. President Gloria Macapagal-Arroyo will be tied to political issues raised by the stronger opposition, which means economic reforms will need to take a backseat," he added The Arroyo administration has prided itself with its economic reforms, which it says has led to higher growth for the country. Just weeks ago, the government announced that the country’s economy expanded 7.5 percent in the second quarter of the year, its fastest pace of growth in two decades. Vistan also said the negative effects of a guilty verdict will have a shorter lifespan than those of an acquittal. “Rallies which will inevitably follow a guilty verdict will last probably one, two weeks. After all, financial support for these activities is not bottomless. But an acquittal will have a lingering effect, and gives birth to too much uncertainties," Vistan said. Unexciting trading today Vistan also said trading at the Philippine Stock Exchange is expected to be uneventful as players stay cautious ahead of the release of the anti-graft court’s decision. Trading at the local stock exchange starts at 9:30 a.m., around 30 minutes into the reading of the court’s 1,000 page verdict. “With a 1,000 page verdict, the decision will probably fully come out after trading hours (12:10 p.m.). Traders will just be listening and staying on the sidelines," he said. Trading at the local bourse has been weak in the recent sessions as a combination of factors—US credit and economic concerns, market anticipation of the US Federal Reserve’s decision whether to cut interest rates on Sept. 18, and political jitters ahead of the release of the verdict on the Estrada case—has sent investors into hiding. The PSEi fell 13.11 or 0.4 percent to 3,267.97 points on Tuesday. Later that day, the Philippine peso slipped to the 47 to a US dollar level, also due to jitters ahead of the release of the verdict. - GMANews.TV