UN Catches Up With Philippines' Rodrigo Duterte, Will China Come To Rescue?

By Panos Mourdoukoutas

The United Nations is catching up with Philippines President Rodrigo Duterte’s human rights record, asking the country’s judicial authorities to launch an investigation.
That’s bad news for Duterte and for financial markets, which have been crushed following his flip-flops on South China Sea disputes.
iShares Philippines is down 20.74 percent since last July; iShares for Vietnam, which which has also been involved in the dispute, have lost close to 15 percent of their value.
Obviously, investors are concerned about the rising economic and political risks of the country, and the prospects for the on-going economic integration of the region into the global economy — most notably China, which needs a market frontier for its manufacturing products.
Actually, the international institutions have been very fair with Philippines. 

For example, last July the nation won an international arbitration ruling, which found that China has no historic title over the waters of the South China Sea.
That was a big victory for both the US and Philippines, its close ally, which had filed the arbitration case.
But Rodrigo Duterte didn’t capitalize on the ruling by having China compensate his country for the damage already done. 

Instead, he decided to side with China on the dispute, and seek a “divorce” from the US!
Apparently, Duterte thought that his country is better off appeasing rather than confronting China.
Now, the UN has caught up with his human rights record. 

And he’s going to need China, an influential UN member, to come to his rescue.
Will Beijing do it?
It’s hard to say. 

So far there’s no official response from Beijing on the issue. 

In the meantime, investors in Philippines equities must keep a wary eye on Mr. Duterte’s next flip-flop. 

It may bring more losses.