Philippine shares slumped on Thursday, falling below the 6,700-points level for the first time in weeks, following the release of weaker-than-expected economic results for the first quarter.
The Philippine economy grew at a slower pace of 5.7 percent in the first quarter, well below the 6.3 percent growth achieved in the fourth quarter of 2013 and the 7.7 percent growth recorded in the first quarter of last year.
Rajiv Biswas, chief economist at IHS Asia-Pacific, said this was the first time that the country’s GDP growth has dipped below 6 percent in nine quarters.
“A key factor that contributed to the moderation in the pace of growth was the continued economic effects of the natural disasters that hit the Philippines in the last quarter of 2013, notably Super Typhoon Haiyan, which damaged agricultural production with adverse effects on food manufacturing production due to the supply chain disruption,” he explained.
On Thursday, the Philippine Stock Exchange index (PSEi) sank 111.21 points or 1.64 percent to 6,676.67, while the wider all shares retreated 56.55 points or 1.39 percent to 4,004.09.
“The market took the lower-than-expected first quarter GDP result as an excuse to capitalize on their gains as the numbers were quite disappointing,” said Jonathan Ravelas, chief market strategist with BDO Unibank Inc.
The first time that the index hit the 6,700-level this year was in April, when the local barometer surged 1.44 percent to close at 6,767.51, up 96.33 points.
All sectors were in the red. Property posted the largest decline, falling 64.53 points or 2.40 percent to 2,624.37, followed by the services sector, which was down 40.16 points or 1.97 percent to 2,002.68.
Holding firms fell 101.53 points or 1.65 percent to 6,049.01, while mining and oil dropped 186.75 points or 1.19 percent. Financials gave up 16.06 points or 1.00 percent to 1,582.43, while industrials retreated 83.91 points or 0.81 percent to 10,238.09.
Market participation was little changed with the total volume of shares traded standing at 1.8 billion, valued at P8.3 billion. Decliners beat advancers 133 to 51, while 39 stocks were unchanged.
Some of the most actively traded stocks on Thursday were Metropolitan Bank and
Trust Co., down 2.96 percent at P83.50; BDO Unibank, Inc., dropping 0.56 percent to P88.40; Megaworld Corp., down 2.37 percent at P4.53; and SM Investments Corp., down 0.97 percent at P763.50.
Shares are expected to consolidate further today, Friday, as the market continues to digest the weaker-than-expected first quarter growth.
“We now expect the market to weigh in on the developments of the GDP. The market will deal with headwinds on its ascent on the basis of contracted growth in the first quarter of this year,” Gab Aguila, equity analyst at BDO Unibank, Inc., said.
Ravelas said that with the recent correction, the market may fall further toward the 6,500-level.
On Wednesday, Philippine shares bounced back from a three-day losing streak, inspired by firmer Asian markets after the release of strong economic data in the United States.
The benchmark Philippine Stock Exchange index (PSEi) added 0.11 percent to close at 6,787.88 while the wider all shares index rose 0.26 percent to 4,060.64.