Philippine shares were badly hit by news of a sharp slowdown in economic growth in the first quarter, way below market expectations of at least 6 percent.
The benchmark Philippine Stock Exchange index closed at 7.505.03 points, paring down its losses to 93.67 points or 1.23 percent from a 1.6 percent decline at midday.
The All-Shares index lost 42.4 points or 0.97 percent to finish at 4,324.79.
The Philippine Statistics Authority earlier in the day released figures showing gross domestic product (GDP) grew only 5.2 percent in the first three months of 2015, far too short of bank and IMF economist forecasts of between 6 percent and 7.3 percent.
The official first-quarter figure also showed a loss of momentum from the revised 6.6 percent growth in the preceding quarter and the 5.6 percent rise recorded in the year-earlier period.
“I guess GDP [is in]one of those rare misses, below everyone’s forecast. According to estimates, the consensus is at 6 percent, and [the 5.2 percent growth outcome]is very underwhelming,” Luis Limlingan, Regina Capital Development Corp. managing director, said in a brief phone interview.
“I think public spending will have to be firing record levels in the next few quarters for the government to reach its full-year target of 7 percent to 8 percent GDP growth,” he added.
The latest GDP numbers validated analyst forecasts that the market may slide to the 7,400 to 7,500 range, said Lawrence C. Lee, Citisecurities Inc. vice president.
“That 7,400 was [just]a number a few weeks ago. Now [Q1] GDP has been priced in the market. I think it will hold at this level [in the next few days],” Lee added.
BPI Securities Corp. Chief Executive Officer and Managing Director Michaelangelo Oyson said in a text message that even after the negativity over the lower GDP wanes, the market may potentially go down further as foreign outflows are viewed to continue.
“I think the outlook remains cautious, with a potential Taper Tantrum Part 2 some time this year,” Oyson said, referring to the tapering of the quantitative easing program initiated by the Federal Reserve and a possible subsequent rate hike, which draws liquidity into the US financial markets from emerging markets.
“While some stocks look attractive, potential foreign outflow could bring some stocks to even much lower valuations,” Oyson added.
“It is difficult to catch the bottom here and hence, investors should pick up stocks from an upside-vs-downside risk perspective,” he added, noting that 2013 experienced the same trend and that the market “eventually recovered.”
On Thursday, all sectors closed in the red, led by the property and financials with 1.93 percent and 1.8 percent losses, respectively.
Actively traded stocks posting the biggest declines were GT Capital Holdings Inc., Universal Robina Corp., BDO Unibank Inc., Ayala Land Inc., Megaworld Corp., Ayala Corp., Philippine Long Distance Telephone Company, JG Summit Holdings Inc., and SM Investments Corp. Metropolitan Bank and Trust Company was the sole actively trade company that ended flat.
Decliners outnumbered advancers 105 to 60, while 53 issues finished unchanged. Total volume stood at 1.33 billion shares, valued at P10.66 billion.
On Wednesday, the benchmark stock index dropped 1.68 percent or 129.80 points to 7,598.70, while the wider All-Shares index retreated 1.56 percent or 69.20 points to 4,367.19.