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PHILIPPINE equities are anticipated to fluctuate within a narrow range this week as investors process the slower-than-forecasted third-quarter economic expansion and await the release of foreign direct investment (FDI) figures.
On Friday, the benchmark Philippine Stock Exchange index (PSEi) dropped by 1.31% or 76.22 points, finishing at 5,759.37, while the broader All Shares index fell by 0.81% or 28.86 points to 3,514.57. This represented the PSEi’s lowest closing in over three years, or since it finished at 5,783.15 on Oct. 3, 2022.
“The Philippine market closed lower as selling activity continued following the publication of GDP (gross domestic product) figures, which were significantly below expectations,” remarked Regina Capital Development Corp. Head of Sales Luis A. Limlingan in a Viber message.
“Corporate profits were insufficient to counterbalance the adverse effects of the disappointing GDP data and the depreciation of the peso to P59 per US dollar.”
Data from the Philippine Statistics Authority (PSA) indicated that GDP grew by 4% year-over-year in the third quarter, a sharp decline from 5.5% in the preceding quarter and 5.2% during the same timeframe a year prior.
This was the slowest growth rate in more than four years, as the economy faced challenges from weak capital expenditures and typhoon-related destruction in agriculture, with public construction impacted by a corruption scandal involving state infrastructure projects that dampened investor sentiment.
Online brokerage 2TradeAsia.com stated that the economic slowdown mirrored the cumulative effects of these domestic challenges, although robust 5.5% growth in services, led by finance and trade, along with anticipated holiday spending, might help cushion fourth-quarter performance.
“Sessions sank to their lowest since October 2022 after the GDP underperformed at 4%,” the brokerage noted. “The PSEi’s subdued decline disguises rotation potential — we emphasize safe investments for the time being, such as banking and dividend portfolios.”
For this week, Philstocks Financial, Inc. Assistant Manager for Research and Online Engagement Claire T. Alviar indicated that the local market is likely to move sideways as cautious attitudes continue to impact investors.
“A positive FDI report could boost confidence, but an unsatisfactory outcome may reinforce the current pessimistic sentiment,” Ms. Alviar stated in a market note.
“Domestically, the potential repercussions of an approaching super typhoon could further dampen sentiment, especially following the recent devastating typhoon in the Visayas.”
Last week, the government proclaimed a state of national calamity after Typhoon Kalmaegi (locally known as Tino) caused extensive damage in the Visayas and Mindanao. On Sunday, Super Typhoon Uwan was projected to affect areas still recovering from the prior storm.
Ms. Alviar remarked that worries regarding a potential “AI-driven tech bubble” in foreign markets are also influencing risk tolerance.
“Meanwhile, the local index was unable to maintain its position above the 5,800 support level. Bargain hunting may aid it in retesting this level, although considerable resistance at the 6,000 threshold persists,” she noted.
2TradeAsia observed that third-quarter corporate earnings calls could present selective trading opportunities, but posited that a more significant market recovery would likely depend on fiscal reforms and clearer indicators of economic resurgence by early next year.
“Current themes highlight a low-conviction environment converging with domestic fiscal challenges, leaning towards selective positioning rather than broad investments,” it stated. “Expect funds to shorten duration and shift into defensive sectors — financial services and consumer staples — which provide yield buffers amid GDP softness that may extend into the fourth quarter.”
The brokerage identified the PSEi’s immediate support at 5,600 and resistance at between 5,900 and 6,000. — Alexandria Grace C. Magno
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