usd and usd: PSEi slumps on disappointing GDP Q1 results

Thursday, May 29, 2014

PSEi slumps on disappointing GDP Q1 results

MANILA, Philippines—The local stock barometer fell sharply on Thursday as investors sold down equities after the country’s first quarter domestic economic growth came in much slower than consensus forecasts.

The main-share Philippine Stock Exchange index lost 111.21 points or 1.64 percent to close at 6,676.67. Dealers said the market was disappointed with the first quarter gross domestic product growth rate of 5.7 percent which was way below the 6.4 percent consensus forecast for the period.

All counters were sold down but the most battered was the property counter (-2.4 percent), this sector being seen as the most sensitive to economic cycles.

After breaking the 6,680 support level following the disappointing first quarter GDP print, the next support level to watch out for would be 6,600, said Asiasec Equities chief strategist Manny Cruz.

Jonathan Ravelas, chief strategist at Banco de Oro Unibank, said profit-taking was triggered by the disappointing first quarter GDP results. With this, he said the market was at risk of revisiting the 6,500 to 6,600 levels.

April Tan, head of research at leading online stock brokerage COL Financial, said there would be “no-rerating” in the stock market due to lower-than-expected GDP results. However, she said the sharp sell-off was likewise “not justified.”

Fund manager Gus Cosio, president of First Metro Asset Management Inc., said while the first quarter GDP results were below consensus forecasts, he did not think this was a “disaster.” “It should bring valuations to realistic levels. For smart money, it’s opportunity,” he said, adding that the Philippine stock market would still have a long way to go.

Local stock brokerage Regina Capital said in its Twitter account: “On a positive note, the probability of the numbers increasing in the next three quarters is higher, so prices can only improve from here.”

Riza Mantaring, president of Sun Life Financial Philippines, said while the 5.7 percent first quarter growth was lower than expected, it was still better than the country’s trend growth rate. Overall, she said the macroeconomic outlook for the Philippines was still positive moving forward.