The main stock index on Friday slid to the 5,700 level, its weakest finish in three years, amid a multibillion-peso corruption scandal that has gnawed on the economy.
The Philippine Stock Exchange Index (PSEi) plunged by 1.31 percent, or 76.22 points, to close at 5,759.37.
The broader All Shares Index also fell 0.81 percent, or 28.86 points, to 3,514.57.
Despite the bloodbath, services, mining and oil still posted strong gains. The property sector, on the other hand, saw the biggest cut of 3.2 percent.
The poor performance of the local bourse came as amid an official report that the Philippine economy had expanded by just 4 percent in the July to September period, its slowest pace in four years. GDP woes
Ron Acoba, chief investment strategist at Trading Edge Consultancy, said that the PSEi was down as much as 1.8 percent in the day before closing to 1.31 percent.
‘The lower-than-expected 3Q GDP (gross domestic product) print reflected a confluence of several factors. First is the slowdown in government spending, which normally accounts for about 15 percent of GDP, due to the government’s corruption scandal, which has forced it to slow down project disbursement,’ he said in a message. Acoba said this has also led to ‘softer consumption’ amid the collapsing confidence of businesses and consumers.
The corruption mess covering flood-control projects triggered a series of congressional probes, linking the names of contractors and even government officials.
It was highlighted anew after several areas in the Visayas were submerged following a strong typhoon this week, further causing public uproar.
Other factors contributing to the weak finish included ‘slower net exports due to the tariffs implemented by the US back in April,’ the analyst added.
Acoba expects to see ‘pretty much the same as the above. for the succeeding quarters.’
Dovish call
‘Meaning, GDP will likely continue to slow. With this, the BSP is expected to step up its rate cuts, which would further put downward pressure on the peso against the US dollar, leading to more foreign capital outflows,’ he said.
‘The government fumbled its bag big time, and everyone now is suffering,’ Acoba added.