Stocks extend gains despite grim GDP data

MANILA, Philippines — The stock market extended its run for a third day yesterday despite news the economy contracted by a severe 16.5 percent in the second quarter.

The benchmark Philippine Stock Exchange index (PSEi) still ended higher at 5,902.58, up 69 points or 1.18 percent.

Likewise, the broader All Shares index gained 29.32 points or 0.84 percent to finish at 3,485.61.

Except for mining and oil, which finished in negative territory, all the other gauges gained ground, with the industrial and holding firms leading the gainers.

Total value turnover reached P6.531 billion but market breadth was negative, 90 to 88, while 46 issues were unchanged.

The market ended higher even as the Philippine economy contracted as a result of the difficult business environment caused by the coronavirus disease 2019 or COVID-19.

Traders said investors may have accepted the weakness of the economy and are just pinning their hopes on economic recovery in the succeeding quarters.

“Local shares extended gains despite the lower than expected second quarter GDP reading, as investors accepted the weakness in the economy and looked ahead to the coming quarters. Sentiment was also boosted on expectations that a stimulus deal will be reached by this week,” said Luis Limlingan of Regina Capital.

In the US, he noted that two Fed officials predicted the economy will recover in the second half of the year, provided there’s more fiscal stimulus. “We’re going to rebound and we are rebounding in terms of growth in the third quarter,” Robert Kaplan told CNN, adding “the economy needs a continuation of the unemployment benefits.”