Index pulls back on dismal GDP data

MANILA, Philippines — The stock index tumbled back to the 6,200 level yesterday, ending two days of gains, as investors continue to digest the disappointing first quarter GDP data, traders said.

The benchmark Philippine Stock Exchange index (PSEi) lost 90.43 points or 1.43 percent to close at 6,236.40 while the broader All Shares index slipped 49.96 points or 1.28 percent to end at 3,858.00.

A total of P6.197 billion worth of shares changed hands yesterday, with advancers beating decliners, 141 to 55, while 50 issues were unchanged.

“The market displayed more weakness after the release of disappointing key economic data. GDP growth for the first quarter contracted by 4.2 percent which is much higher than most expected,” said Chris Mangun of AAA Equities.

He said this has made investors more jittery over the economic situation.

“Bank lending for the month of March also contracted by 4.5 percent mainly due to the decline in loans for production activities,” he said, noting that companies are not doing enough business to justify the need for more liquidity despite lower rates.

Despite the current weakness, the situation is expected to improve with second quarter GDP likely to improve.

“We may see the market lose another five to seven percent in the short-term although, we still believe that current levels provide a good opportunity for investors in anticipation of higher valuations in the medium to long term,” Mangun said.