Slow economy drags Philippine share prices lower

Philippine share prices lost the momentum from a two-day uptrend to drop below the 7,800-level on the benchmark PSEi Thursday, as the market was shaken by weaker-than-expected gross domestic product (GDP) data in the first quarter.

"I think it's really the GDP. The consensus was 6.5. The market's expensive, so you have to be growing 6.5 to 7.0 percent," Carlo L. Capacillo, senior dealer at AP Securities Inc., said.

The main PSEi dropped 68.84 points or 0.88 percent to 7,757.69 at the closing bell. The broader All Shares lost 26.59 points or 0.57 percent to 4,626.42.

The Philippine Statistics Authority (PSA) reported the economy grew by 6.4 percent in the first quarter of the year, slower than the 6.5 to 7.0 percent forecast.

It compares with 6.6 percent in the fourth quarter and the revised 6.8 percent in the first quarter of 2016.

It was also the slowest in more than a year compared with 6.3 percent in the fourth quarter of 2015, and matched the 6.4 percent in the third quarter of the same year.

"We do expect the market to trade lower since the GDP doesn't justify a higher valuation in the PSEi as a whole," Capacillo said.

He noted that US markets were also weak overnight after reports of a leaked memo by former Federal Bureau of Investigation (FBI) Chief James Comey raised concerns that US President Donald Trump could have tried to interfere with a federal investigation.

"At 9:52 a.m. ET (1352 GMT), the Dow Jones Industrial Average was down 185.86 points, or 0.89 percent, at 20,793.89, the S&P 500 was down 20.52 points, or 0.86 percent, at 2,380.15 and the Nasdaq Composite index was down 61.63 points, or 1 percent, at 6,108.24," a Reuters report said.

"It was the first big drop since Trump took office and it has something to do with his issues," Capacillo said.

Summit Securities Inc. President Harry G. Liu noted the decline in US markets affected investor sentiment in the Philippines.

"Market was down, brought about by the US market last night and the news on President Trump. And this sentiment affected us, also our market," Liu said.

More than 1.023 billion shares, valued at P7.492 billion, changed hands. Losers led winners, 124 to 74, and 51 issues were unchanged. — VDS, GMA News