Magno, Maria Cielo D.Alcantara, Adrian M.Tanjuatco, Rafael Emmanuel H.2026-03-122026-03-122025-06-06https://selib.upd.edu.ph/etdir/handle/123456789/5255This study aims to find out the effect of geopolitical risk, specifically the West Philippine Sea dispute, on the Philippine stock and foreign exchange markets. The West Philippine Sea dispute continues to be a major concern for the Philippines and the sovereignty of territory. The study hypothesizes that the increased geopolitical risk due to the West Philippine Sea dispute lead to decreased market returns, PHP depreciation, and increased market volatility. Utilizing a custom West Philippine Sea Geopolitical Risk Index consisting of local news sources, namely The Manila Times, INQUIRER.net and Business Mirror, these hypotheses were tested using OLS, GARCH and event study empirical models. Results show that geopolitical risk from the WPS does not have a statistically significant effect on both the returns and volatility of the PSEi and USD/PHP exchange rate. In addition, the event study showed no significant abnormal returns around major WPS-related incidents. The Philippine markets are relatively insensitive to the local geopolitical events in the WPS. This can be likely due to investor sentiment in emerging markets having a stronger influence from global factors. The study contributes to the existing literature on emerging markets sensitivity to geopolitical risk in the context of the Philippines and West Philippine sea dispute.enGeopolitical riskWest Philippine SeaPhilippine Stock Exchange Indexforeign exchange ratemarket returnsvolatilityGARCHThesis