Growth report fails to lift stock market

MANILA, Philippines - Massive selldown by fund managers, surprisingly following the announcement of robust first quarter Philippine economic growth, weighed down heavily on the main index, which recorded its largest single-day loss in history.

The benchmark Philippine Stock Exchange index (PSEi) suffered a bloodbath yesterday, plunging 3.81 percent or 275.22 points to 6,953.35. It is the largest single-day loss in the bellwether index, eclipsing the 263.84-point drop on Feb. 28, 2007.

“Concerns about US Federal Reserve scaling back its quantitative easing overshadowed the surprising gross domestic product (GDP) data,” Freya Natividad, analyst at online brokerage firm 2TradeAsia.com, said in a phone interview.

Philippine GDP surged a higher-than-expected 7.8 percent in the first quarter, driven by the construction and manufacturing industries.

“A string of negative leads sent global stocks on yet another tailspin only a day after it posted a strong comeback off a four-session slump,” said Justino Calaycay Jr., analyst at Accord Capital Securities.

He said there were also questions over European and China’s growth, adding to the gloomy sentiments.

In the US, Wall St. succumbed to worries that the Fed will pull out its stimulus program given an economic recovery. The Dow Jones industrial average declined 0.69 percent or 106.59 points to 15,302.80 while the broader Standard & Poor’s 500 index slipped 0.7 percent or 11.70 points to 1,648.36.

Asian stocks such as Japan’s Nikkei 225 that sank 5.15 percent or 737.43 points to 13,589.03 were also sold down by fund managers.

Locally, all sub-indices were in the negative territory, led by financial firms that slumped four percent or 73.51 points to 1,766.16.

But turnover picked up substantially, fuelled by several block sales of Cosco Capital Inc. and Ayala Corp. Value of shares traded jumped to P16.86 billion from P9.63 billion on Wednesday.

Decliners dominated advancers, 160 to 15, while 38 stocks did not change.

Given the large drop, analysts foresee the main index recovering in the near term.

Calaycay said there are signs of window dressing and a technical rebound that should lift share prices higher.

For Natividad, the main index might trade at 6,900 to 7,020 as most investors will remain cautious.