PSEi finishes in red on recession impact
THE stock market snapped its three- day winning streak on Friday as news of the Philippine economy plunging into a TECHNICAL RECESSION IN THE SECOND QUARTER fiNALLY hit investors.
The benchmark Philippine Stock Exchange index (PSEi) shed 0.96 percent or 56.56 points to close the trading week at 5,846.02, while wider All Shares was down 0.52 percent or 18.08 points to finish at 3,467.53.
Regina Capital Development Corp. Managing Director Luis Limlingan reported that local shares were sold off as foreign investors reacted late to the weaker-thanexpected second-quarter reading of the country’s gross domestic product (GDP).
The Philippine Statistics Authority
reported on Thursday that domestic output shrank by a record 16.5 percent in April to June from the revised 0.7 percent in January to March. A technical recession occurs when the economy contracts for two straight quarters.
Net foreign selling reached P6.78 billion on Friday, a day after a seven-day slump was stopped.
AAA Equities Head of Research Christopher Mangun noted that the bourse closed with losses for the fifth consecutive week.
“Tighter lockdown restrictions on Metro Manila, as well as [the] dismal second-quarter GDP data have weighed heavily on [investor] sentiment,” he said. “Investors are having a hard time trying to see the light at the end of the tunnel, as we are almost in the middle of the third quarter and [the number of] coronavirus cases continue to climb.”
As of Friday, the number of confirmed coronavirus disease 2019 cases in the country surged anew to 122,754, of which 53,734 are active. Of the total, 66,852 have recovered and 2,168 succumbed to the highly infectious disease, which first emerged in the city of Wuhan in China’s central Hubei province.
The market may continue to trade sideways until supportive monetary policy adjustments are made or more fiscal stimulus measures from are in place, Mangun said.
Both would strengthen the economy’s recovery and improve investor sentiment, he added.
Wall Street kept advancing overnight, with the Dow Jones, S&P 500 and Nasdaq adding 0.68 percent, 0.64 percent and 1 percent, respectively.
Most Asian markets fell. Tokyo shed 0.39 percent, Shanghai fell by 0.96 percent, Hong Kong lost 1.6 percent, Jakarta was down 0.66 percent, Singapore declined by 0.43 percent and Bangkok slipped by 0.85 percent. Seoul gained 0.39 percent and Ho Chi Minh inched up by 0.17 percent.
In Manila, sectors ended mixed. Mining and oil led gainers at 2.46 percent while financials led losers at 1.85 percent.
Total volume turnover was at 5.27 billion shares, valued at P10.92 billion.
Winners outpaced losers, 113 to 82, while 46 securities were unchanged.