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Shares drop further as IMF cuts growth outlook

PHILIPPINE shares declined on Wednesday after the International Monetary Fund (IMF) lowered its economic growth outlook for the country and as investors remained cautious ahead of the announcement of new quarantine restrictions.

The Philippine Stock Exchange index (PSEi) lost 38.90 points or 0.54% to close at 7,068.92 on Wednesday, while the broader all shares index went down by 16.81 points or 0.38% to 4,403.26.

“The market inched lower as investors digested the reports that the IMF downgraded the country’s GDP (gross domestic product) growth projection for the year,” Timson Securities, Inc. Trader Darren Blaine T. Pangan said in a Viber message.

The IMF lowered its GDP growth outlook for the country to 3.2% from its 5.4% forecast in June due to the surge in coronavirus disease 2019 (COVID-19) seen in August. This is below the government’s 4-5% full-year target.

Philippine GDP contracted by a record 9.6% in 2020.

“Inflation concerns amid the elevated global oil prices and agricultural damage caused by the recent typhoons were seen to have caused the negative sentiment,” Japhet Louis O. Tantiangco, senior research and engagement supervisor at Philstocks Financial, Inc., said in a separate Viber message.

“Investors also took a cautious stance while waiting for the government’s decision on the social restriction measures of the country after Oct. 15,” he added.

Severe tropical storm Maring, internationally named Kompasu, exited the Philippine area of responsibility on Tuesday, Oct. 12. The Department of Agriculture said the total value loss as of Tuesday evening amounted to P447.8 million, subject to validation.

Meanwhile, the government is expected to announce a new quarantine classification for Metro Manila as its Alert Level 4 status will only be in effect until Oct. 15.

Sectoral indices were split on Wednesday. Mining and oil gained 260.46 points or 2.54% to 10,477.86; financials went up by 19.86 points or 1.29% to finish at 1,557.67; and property rose 18 points or 0.55% to 3,256.15.

Meanwhile, industrials dropped 191.20 points or 1.80% to 10,416.64; holding firms shaved off 65.67 points or 0.93% to 6,925.04; and services declined by 14.25 points or 0.75% to end at 1,871.40.

Value turnover increased to P11.93 billion with 1.33 billion issues traded on Wednesday from the P9.74 billion with 2.45 billion shares the previous trading day.

Decliners outnumbered advancers, 111 against 89, while 48 names remained unchanged.

Foreigners logged P219.72 million in net selling on Wednesday, a reversal of the P2.77 million in net purchases seen on Tuesday.

“We’ll have to see in the remaining days of the week if the index continues to stay above the 7,000 level,” said Timson Securities’ Mr. Pangan. “Next resistance to watch lies at the 7,320 area.” — Keren Concepcion G. Valmonte

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