Impeachment, coups tied to PH stock market swings, BSP study finds
Not every bout of political turmoil rattles the local stock market, according to a research paper by the Bangko Sentral ng Pilipinas (BSP), which found that certain forms of instability can still shape stock returns even in a country with a relatively shallow capital market.
In a discussion paper published in December 2025, BSP researchers Tristan Canare, Carl Francis Maliwat and Elisa Nebres found that while overall political instability may not significantly sway markets, specific episodes can affect stock returns.
The paper measured political instability using three approaches: indexes derived from Google Trends search data, indexes built from keyword searches in news articles, and a list of political events.
The researchers said focusing on the Philippines helps fill a gap in the literature by examining a country with a relatively shallow equity market.
Risk and uncertainty
The research came as the country grappled with a major corruption scandal involving state-funded flood control projects. The controversy, which implicated lawmakers and members of the Cabinet, paralyzed government spending and triggered a confidence shock that sent local stock prices lower.
Canare, Maliwat and Nebres found that the conclusion of impeachment trials, selected coup attempts and certain presidential elections were among the events that can move stock returns.
For instance, the conclusion of the impeachment trial of former President Joseph Estrada was associated with the largest negative cumulative abnormal returns among the cases studied, coinciding with a change in leadership and large-scale street protests.
By contrast, the impeachment of former Chief Justice Renato Corona also coincided with negative returns, but the effect was smaller. The paper said this likely reflected the absence of an expected shift in policy direction, with the impact driven mainly by political uncertainty rather than leadership change.
The authors also found that coup attempts and plots tend to weigh on markets by increasing uncertainty, even when they do not succeed. The 2003 Oakwood mutiny, they noted, likely dampened sentiment because it marked the first major military uprising since the 1989 coup attempt, while the events surrounding “Edsa III” were also associated with negative abnormal returns.
“Political instability brings about risk and uncertainty, which in turn, affect the stock market in multiple ways,” the paper read. “Risk and uncertainty also increase the risk premium on the discount rate of investors, which in turn can lead to lower stock prices.”
