Stocks retreat after sell down on GDP news

MANILA, Philippines — Stocks backpedalled yesterday as investors sold on news following the release of robust economic growth data for 2022.

The 30-company benchmark Philippine Stock Exchange index (PSEi) closed at 7,042.70, down 38.66 points or 0.55 percent, while the broader All Shares index slipped by 9.87 points or 0.27 percent to 3,692.89.

Total value turnover thinned to P5.1 billion, but market breadth was positive, 107 to 99, while 49 issues were unchanged.

2TradeAsia head Grace Cerdena said investors realigned their portfolio after the country posted its fastest annual economic growth in more than four decades.

Gross domestic product (GDP) grew by 7.6 percent last year, the fastest pace since 1976, and exceeded the government’s 7.5 percent target.

In the fourth quarter, the Philippine economy grew at a stronger-than-forecast annual rate of 7.2 percent due to pent-up demand following the lifting of COVID-19 restrictions.

“The above-consensus GDP growth in 2022 should give the Bangko Sentral ng Pilipinas space to tighten policy further in the first half of 2023,” said Nicholas Mapa, a senior economist with ING.

Philstocks Financial analyst Mikhail Plopenio, on the other hand, said the market’s decline could be attributed to worries over the country’s widening trade deficit, seeing this as a sign of the challenging global economic environment.

Around Asia, equities notched a fresh seven-month high, with Hong Kong shares playing catch-up to other markets’ gains as trade resumed after a three-day Lunar New Holiday.

TD Securities analyst Mitul Kotecha expects emerging market assets to outperform in the coming months due to “cheaper valuations, softer US dollar, peak Fed rates pricing, lower US Treasury yields and China reopening.”

Traders betting that the US Federal Reserve will soon tone down its aggressive rate hike policy got a lift after the Bank of Canada on Wednesday raised rates but became the first major central bank to say it would likely hold off on further increases for now.

After a series of super-sized rate hikes last year, the US central bank is now largely expected to raise rates by a smaller 25 basis points next week on signs that inflation is cooling.