Share prices dropped for the fourth successive trading day after the market received confirmation the economy missed the government’s growth assumption of 6 to 6.5 percent for 2024.
Investors took the chance to trim their portfolios after the Philippine Statistics Authority reported that gross domestic product (GDP) expanded by 5.6 percent for the whole of 2024, below the government’s assumption of 6 to 6.5 percent, though topping the year-earlier 5.5 percent.
Market players had expected GDP to have expanded by 5.8 percent, even if it missed the government’s growth target.
The main PSEi lost 45.81 points or 0.74 percent to close at 6,107.66., while broader All Shares dropped 24.2 points or 0.67 percent to 3,599.32.
Losers edged gainers 118 to 76 with 36 stocks unchanged. Trading turnover reached P4.95 billion.
After the opening bell, the PSA released the National Income Accounts, which showed the economy expanded at a rate below market expectations.
Stockbroker SB Equities Inc. noted GDP in the fourth quarter grew by 5.23 percent, compared with 5.24 percent a year earlier.
It pointed at the “underperformance of household consumption” as a major reason for the fourth-quarter slump. This item in the national accounts dipped to 4.7 percent from 5.3 percent in the October to December period.
“We believe that weather disturbances that struck the domestic economy at the early part of the quarter clipped household spending’s performance,” SB Equities said.
“Moreover, gross capital formation growth eased to a three-quarter low – 4.1 percent – year-on -year, partly given a high base,” it added.
Philstocks Financial Inc. noted that Thursday’s was the fourth straight trading day of declines for the PSEi as investors felt “disappointed” by the country’s economic performance.
“Adding to the investors’ dismay was the Federal Reserve’s decision to keep their policy rates unchanged in their latest meeting,” it said.
The local currency closed at P58.28 to the dollar, up from 58.425 on Tuesday. The market was closed on Wednesday for the Lunar New Year. The peso opened on Thursday at P58.43, an intraday low, hitting a high of P58.28. Trading turnover reached $1.33 billion.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the peso’s uptick happened against the backdrop of an expectation that the softer-than-expected GDP “could support a possible policy rate cut as early as the next Bangko Sentral ng Pilipinas’ rate-setting meeting on Feb 13, 2025.”
This could also support recent hints of a possible cut in large banks’ reserve requirement ratio to 5 percent this year from the current 7 percent, he added.
Overseas, the Thai baht and the Indian rupee nudged lower as the dollar steadied after the US central bank kept interest rates unchanged. Chair Jerome Powell signalled no rush to trim rates again until inflation and jobs data made the situation appropriate.
The Indonesian rupiah weakened 0.6 percent to 16,265 against the dollar, with the central bank saying the currency’s depreciation was driven by market reaction to the Fed’s rate decision and stronger US stocks.
Investors across the region also remained cautious after the White House said US President Donald Trump still plans to make good on his promise to issue tariffs on Canada and Mexico on Saturday.
Trump had set a February 1 deadline for imposing a 10 percent tariff on goods imported from China.
Mexico, Canada and China are the three largest US trading partners, accounting for more than $2.1 trillion in annual imports and exports.
“Since there is some impact (from the tariffs) on global trade, that will negatively affect the export channels of the Asian economies,” said Poon Panichpibool, market strategist at Krung Thai Bank.
Most actively traded International Container Terminal Services Inc. was up P1.80 at P351. SM Investments Corp. declined P27 to P795. Bank of the Philippine Islands dropped by P1 at P124.50. BDO Unibank Inc. lost P0.50 at P141.50. SM Prime Holdings Inc. appreciated by P0.55 to P24.05. Philippine Seven Corp. went up by P0.85 to P64.90. (With additional report from Reuters)
