But Malacañang immediately took credit for the markets’ rebound and dispelled speculations of an impending resignation by the President.
Stock prices posted their biggest single-day gain in 13 years as foreign fund managers led buyers at the stock market, grabbing almost all stocks, analysts said.
"I have never seen this much foreign buying for a long time," said Irving Ackerman of I. Ackerman and Co.
"Foreign players are just gobbling up local stocks. It’s broad-based buying. There are no individual company stories," Manny Cruz of Mark Securities Corp. said.
In currency trading, the peso – after hitting historic lows – surged yesterday against the dollar by 2.45, the biggest single-day gain in recent memory, and closed at 48.05. It began at P50.50 to $1 and rose to P47.95 during trading.
The 30-stock Philippine Stock Exchange main composite index soared 212.25 points, or 16 percent, to 1,500.10 from 1,287.58, its largest single-day surge since rising 16.3 percent on July 28, 1987.
Gainers swamped losers 99 to eight, with six stocks unchanged.
Analysts said the markets reacted positively to reports that Mr. Estrada had sent an emissary to the political opposition to discuss a graceful exit for him.
Gonzalo Bongolan, research head at PCCI Brokers Securities, said the defections from Mr. Estrada’s LAMP coalition and in the Cabinet fueled speculations that the President would be forced to step down soon.
"The pillars of his support are giving in," Bongolan said.
"People are reacting positively to news that the impeachment process will be underway," Cruz said.
"There is growing speculation that with the recent defections, President Estrada may soon step down," said Erwin Balita, analyst at Securities 2000 Inc.
"There seems to be a perception that there might be a change in government. Whatever it is, graceful exit, resignation or impeachment, the market is anticipating that," said Harry Liu, president of Summit Securities Inc.
"People are hoping this is the beginning of the end of the current administration especially with the impeachment proceedings starting (yesterday)," said Jose Ricardo of Garcia Diversified Securities Inc.
Rumors of talks between Mr. Estrada and the political opposition for a graceful exit flew thick as the House of Representatives began deliberations on the impeachment complaint against the President.
But the rally is expected to be short-lived as some investors began profit-taking late in the trading, analysts said. "We’ll probably see a retreat within the week," Bongolan said, adding that they expect the composite index to meet resistance at the 1,550 mark.
Astro del Castillo, research head at A & A Securities, called yesterday’s advance a "relief rally" that made the market susceptible to profit-taking. "We’ll probably see profit-taking within the next couple of days," Del Castillo said. "It came too fast, too soon."
"What we saw would be the biggest single-day rally but we do not think we will be able to see more of that. There are still a lot of things to resolve before the actual impeachment proceeding can really start," said Hazel dela Cruz, research chief at Orion Squire Capital Inc.
And until Mr. Estrada actually goes, the market might experience volatility, analysts said, warning that a prolonged impeachment process would batter the economy.
Toledo attributed the financial markets’ dramatic recovery to "perceptions that the Filipino people are mature enough to accept that it is only through a constitutional process that any transition of power will be handled" – meaning that most Filipinos don’t want Mr. Estrada ousted by protests.
He said the recovery had nothing to do with speculations of an impending resignation by Mr. Estrada. "Let me just say nothing is farther from the truth. This is again part of the opposition group’s disinformation campaign," Toledo said.
Rafael Buenaventura, governor of the Bangko Sentral ng Pilipinas, likewise attributed the peso’s performance to assurances that the scandal would be resolved through "a constitutional process and that there is no threat of a violent change."
Budget Secretary Benjamin Diokno said the "economic trajectory" was still on upward trend despite the jueteng scandal and that "if the political crisis is resolved soon, the economy will continue to go up."
Raul Concepcion, chairman of the Federation of Philippine Industries, said, however, that the market surge proved that Mr. Estrada was "the problem." "I just hope the administration doesn’t mess it up," he said, referring to the market recovery.
Last Friday, Mr. Estrada lost his majority in the House of Representatives, where an impeachment complaint against him is pending, when over 40 congressmen led by Speaker Manuel Villar Jr. bolted Mr. Estrada’s LAMP coalition.
The mass resignation made Mr. Estrada’s impeachment more certain.
Mr. Estrada’s support in the Senate began to seriously erode also last week after Senate President Franklin Drilon and senators Rodolfo Biazon and Nikki Coseteng left LAMP.
Yesterday, Sen. Ramon Revilla, a close friend of the President and long-time presidential ally, became the sixth senator to quit the ruling coalition.
Share prices and the peso-dollar rate went into a freefall last month after the President was accused by former drinking buddy Ilocos Sur Gov. Luis "Chavit" Singson of receiving bribes from illegal gambling bosses and pocketing tobacco taxes.
Financial traders said the economic crisis was fueled by investors’ lack of confidence in the Estrada administration, now in serious danger of collapsing because of the jueteng scandal. – Marichu Villanueva, Marianne Go, wire services