Stocks sink as Q1 GDP falls below expectations
STOCKS dropped yesterday, with the main index sinking to the 7,700 level anew, as sentiment soured after the first quarter economic growth of the country fell below expectations, triggering a sell-off.
The broader all-shares gauge likewise declined 26.59 points or 0.57% to 4,626.42.
“The market obviously reacted negatively to the GDP (gross domestic product) result. After hopes were lifted by the government’s confident target of 7% for the period, [it] turned out to be a huge miss,” Justino B. Calaycay, Jr., senior research analyst at Philstocks Financial, Inc., said.
The Philippine Statistics Authority reported on Thursday that GDP growth eased to 6.4% in the first quarter of 2017, below the lower end of the government’s 6.5-7.5% target for the year and the 6.8% median growth estimate of economists in a BusinessWorld poll.
The preliminary result was also slower compared to the 6.6% posted in the preceding quarter and 6.9% in the same period last year.
Summit Securities, Inc. President Harry G. Liu said aside from the “lower-than-expected” GDP which affected sentiment, the PSEi was also dragged by persisting political worries in the United States.
“Optimism was affected with the GDP [result] but the drop was triggered by the sell-off and volatility in the US market... When the US coughs, we get sick,” Mr. Liu said.
At the close of trading yesterday, all sectoral indices ended in the red, led by property, which lost 55.85 points or 1.57% to 3,501.95.
Services also dropped 11.11 points or 0.68% to 1,602.55; industrials fell 68.74 points or 0.62% to 10,945.89; financials went down 9.21 points or 0.47% to 1,918.55; holding firms shed 32.08 points or 0.40% to 7,918.45; and mining and oil declined 17.19 points or 0.13% to 12,615.38.
Value turnover dropped to P7.49 billion yesterday from Wednesday’s P8.01 billion, with 1.02 billion shares changing hands.
Foreigners turned sellers, with net outflows logged at P549.37 million, a reversal of the previous session’s net purchases worth P510.51 million.
Decliners trumped advancers, 124 to 74, while 51 names were unchanged.
Moving forward, Philstocks’ Mr. Calaycay said sentiment could improve as investors finally digest the bigger picture amid the lower GDP print for the first quarter.
“[T]he economy is still growing at a fast pace relative to our peers, even as it is less than what our managers projected. On hindsight, this was hinted at by the not-too-stellar Q1 earnings cycle,” he said. “The market will probably spend the next couple of days looking for a firm support. A further downside may unravel but absent heavy external negatives, volatility maybe more subdued.” -- ICCD