Local stocks slump as PHL growth prospects dim

THE MAIN INDEX weakened anew on Wednesday, nearing its record low for the year as the sluggish outlook on the country prompted more foreign investors to pull out their funds from the local market.

The benchmark Philippine Stock Exchange index (PSEi) plunged 0.82% or 58.24 points to close at 7,001.14 yesterday, managing to bounce back from an intraday low of 6,960.43, just a few points shy of its 52-week low of 6,923.67.

The broader all-shares index also slumped 0.85% or 36.95 points to 4,298.74.

“The PSEi ended negative today as worries on global growth keep market sentiment pessimistic. The IMF’s sluggish outlook for the Philippine economy is one of the reason why investors, especially the foreigners, are still selling their shares,” Timson Securities, Inc. Equities trader Jervin S. de Celis said in a mobile message on Wednesday.

The International Monetary Fund (IMF) recently lowered its growth forecast for the Philippines to 6.5% from its previous projection of 6.7%, citing downside risks such as “rising inflation, continued rapid credit growth, higher US interest rates and US dollar, volatile capital flows, and trade tensions.”

Aside from the IMF, the World Bank also cut its growth forecast on the country to 6.5%, from the previous 6.7% forecast.

“Since we lack fresh leads to buoy the local market sentiment, market participants are either staying on the sidelines or they trade select second-liner stocks that have been rallying,” Mr. De Celis added.

Papa Securities Corp. trader Gabriel Jose F. Perez noted the day’s net foreign selling figure of P507.96 million once again pulled down the market, which swelled from Tuesday’s P158.01-million net outflow.

“With the index teetering and closing right on the 7,000 psychological level and also just a few points above its previous 2018 intraday low of 6,923, we should watch out if foreign selling once again proves to be the index’s bane tomorrow,” Mr. Perez said in an e-mail.

The bloodbath spilled over to the sectoral indices, led by financials which fell 0.98% or 15.44 points to 1,550.71.

Holding firms followed, declining 0.87% or 60.33 points to 6,845.76. Property shed 0.63% or 22.29 points to 3,497.32; industrials dropped 0.62% or 64.88 points to 10,362.38; services slipped 0.52% or 7.84 points to 1,489.30; while mining and oil dipped 0.14% or 12.66 points to 8,622.42.

Some 1.53 billion issues valued at P5.37 billion switched hands, climbing from the previous session’s P4-billion turnover.

Decliners outpaced advancers, 139 to 54, while 50 names ended flat.

“I think the 3Q GDP (gross domestic product) growth and corporate profit reports can improve market sentiment if they turn out better when they are released next month,” Timson Securities’ Mr. De Celis said.