Stocks decline as IMF cuts PHL growth forecast
PHILIPPINE SHARES declined further on Tuesday after the International Monetary Fund (IMF) slashed its economic growth forecast for the country.
The Philippine Stock Exchange index (PSEi) dropped by 0.75% or 48.57 points to finish at 6,410.07 on Tuesday, while the broader all shares index fell by 0.49% or 17.19 points to close at 3,450.05.
“The local market dropped as investors digested the IMF’s downward revision of its projection for the Philippines’ economic growth for this year after the slower-than-expected first-quarter gross domestic product (GDP) data,” Philstocks Financial, Inc. Research and Engagement Officer Mikhail Philippe Q. Plopenio said in a Viber message.
The IMF now sees Philippine GDP expanding by 6% this year, lower than its 6.2% forecast in its World Economic Outlook in April, it said on Monday. This is within the government’s 6-7% target.
The Philippine economy grew by 5.7% in the first quarter from 6.4% a year ago and 5.5% in the fourth quarter.
“Investors also took a cautious stance ahead of the local holiday,” Mr. Plopenio added.
Philippine financial markets are closed on June 12 (Wednesday) for Independence Day.
“The local bourse logged its third consecutive day of decline as investors locked in their gains ahead of the conclusion of the US Federal Reserve policy meeting and the latest US CPI (consumer price index) reading. The meeting will conclude on Wednesday with an interest rate policy decision and a subsequent press conference featuring Federal Reserve Chair Jerome H. Powell,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
The Federal Open Market Committee was set to start its two-day policy meeting overnight, where it is expected to keep its target rate at the 5.25%-5.5% range for a seventh straight meeting.
The Fed will also update their economic and interest rate projections at this week’s review.
Officials have turned more hawkish since the last such release in March, when the median projection was for a reduction of three quarter-points this year, Reuters reported. Markets are currently pricing in only 37 basis points of cuts by December.
Back home, all sectoral indices ended lower. Services lost 1.79% or 35.60 points to close at 1,953.25; mining and oil went down by 1.43% or 129.70 points to 8,880.71; property dropped by 1.01% or 24.94 points to 2,423.22; holding firms declined by 0.33% or 18.78 points to 5,636.48; financials retreated by 0.29% or 5.82 points to 1,968.19; and industrials decreased by 0.28% or 26.14 points to 9,049.07.
Value turnover climbed to P3.3 billion on Tuesday with 400.9 million issues switching hands from the P3 billion with 282.36 million shares traded on Monday.
Decliners outnumbered advancers, 99 against 82, while 43 names ended unchanged.
Net foreign selling rose to P742.96 million on Tuesday from P161.4 million on Monday. — R.M.D. Ochave with Reuters