Shares extend decline on 2020 GDP contraction

STOCKS closed lower on Thursday following the release of data showing the Philippine economy continued to shrink in the fourth quarter, resulting in a full-year contraction in gross domestic product (GDP).

The bellwether Philippine Stock Exchange index (PSEi) declined 11.77 points or 0.17% to close at 6,851.84 yesterday, while the broader all shares index fell 22.98 points or 0.55% to end at 4,108.34.

Timson Securities, Inc. Head of Online Trading Darren Blaine T. Pangan said in a mobile phone message that the local market closed lower as investors took their cue from the GDP data released yesterday.

The Philippine Statistics Authority reported that GDP shrank by 9.5% in 2020, the worst contraction on record. This, after the economy contracted by 8.3% in the fourth quarter.

Socioeconomic Planning Secretary Karl Kendrick T. Chua attributed the economy’s slump to weak private consumption, saying in a briefing that continued restrictions on mobility hampered spending.

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco meanwhile said the market ended in negative territory as investors continued to worry about the country’s coronavirus disease 2019 (COVID-19) cases.

“Bargain hunting was seen in Thursday’s trading, bringing the PSEi to as high as 6,918.30 intraday,” Mr. Tantiangco said in a mobile phone message.

“Selling pressure eventually took over however backed by worries over the country’s COVID-19 situation and how it may slow down or delay our economic recovery,” he added.

The Department of Health reported 1,169 new COVID-19 cases on Thursday, which brought the country’s tally to 519,575.

Quezon City recorded the highest number of new cases at 57, followed by Isabela at 54, and Manila City, Davao City and Rizal at 42 each.

Majority of sectoral indices closed lower on Thursday. Mining and oil retreated by 189.85 points or 2.16% to 8,577.98; services went down 21.54 points or 1.42% to 1,489; industrials shrank 42.86 points or 0.48% to 8,876.44; and financials lost 5.45 points or 0.38% to 1,410.91.

Meanwhile, holding firms rose 6.48 points or 0.09% to 7,024.45 and property improved by 2.94 points or 0.08% to 3,478.04.

Value turnover amounted to P8.80 billion on Thursday with 56.22 billion issues switching hands, lower than the P10.68 billion with 98.96 billion shares seen in the previous session.

Decliners beat advancers, 136 versus 73, while 53 names ended unchanged.

Net foreign selling meanwhile declined to P1.31 billion yesterday from the P1.37 billion in net outflows logged on Wednesday.

“6,700 may be considered the nearest support area, while 7,300 is where resistance may be pegged at,” Timson Securities’ Mr. Pangan said. — Revin Mikhael D. Ochave

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