PSEi sinks to 7-month low on growth concerns

The main index sank to the 5,800 level on Monday, hitting a near seven-month low, due to heavy selling amid expectations that Philippine economic growth may have slowed in the third quarter.

The Philippine Stock Exchange index (PSEi) plunged by 1.71% or 101.62 points to close at 5,828.06, while the broader all shares index dropped by 1.23% or 44.38 points to 3,548.90.

This was the PSEi’s worst finish in nearly seven months or since it ended at 5,822.85 on April 7.

“The PSEi gapped down as sellers heavily influenced the market early in the session. Traders are likely already pricing in the upcoming GDP (gross domestic product) and inflation data to be released this week, while overall sentiment remains cautious,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“The local market plunged as investors anticipate dismal third-quarter GDP data to be released later this week amid government underspending and tempered business confidence caused by the country’s corruption issues,” Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message.

The Philippine Statistics Authority will release October inflation data on Nov. 5 (Wednesday) and third-quarter GDP data on Nov. 7 (Friday).

Finance Secretary Ralph G. Recto last week said that underspending in the third quarter, mainly due to a corruption crackdown that curbed public disbursements, could have weighed on growth. The government only disbursed PHP 1.46 trillion in the third quarter versus its PHP 1.6-trillion spending program for the period, Treasury data showed.

Meanwhile, a BusinessWorld poll of 17 analysts yielded a median estimate of 1.8% for October headline inflation. If realized, this would have picked up from the 1.7% clip in September but slowed from the 2.3% seen in the same month last year. It would also be the fastest clip in eight months or since the 2.1% in February and would match the 1.8% in March.

Still, the median estimate falls within the Bangko Sentral ng Pilipinas’ (BSP) 1.4-2.2% forecast. It would also mark the eighth month in a row that inflation undershot the BSP’s 2-4% annual target.

Most sectoral indices closed in the red. Financials sank by 3.33% or 65.35 points to 1,896.58; mining and oil dropped by 2.11% or 269.39 points to 12,488.29; property fell by 1.96% or 42.58 points to 2,123.15; holding firms went down by 1.34% or 64.66 points to 4,754.79; and industrials retreated by 1.24% or 110.14 points to 8,757.08.

Meanwhile, services edged up by 0.03% or 0.75 point to 2,265.25.

Market breadth was negative as decliners overwhelmed advancers, 134 to 56, while 62 issues were unchanged.

Value turnover went up to PHP 9.80 billion on Monday with 801.95 million shares changing hands from Thursday’s PHP 4.98 billion with 660.39 million issues traded.

Net foreign selling jumped to PHP 1.33 billion on Monday from PHP 354.32 million on Thursday. — Alexandria Grace C. Magno