MANILA, Philippines–Local stocks are seen trading with caution this week as investors reassess their portfolio following a disappointing first-quarter economic growth in the Philippines.
Last week, the main-share Philippine Stock Exchange index (PSEi) lost 163.68 points, or 2.4 percent, to close on Friday at 6,647.65.
The Philippine economic growth in the first quarter fell below the market consensus of 6.4 percent and eased to less than 6 percent for the first time in nine quarters, noted Banco de Oro Unibank strategist Jonathan Ravelas.
“Chartwise, with the break below the 6,700 level, expect the index to consolidate within the 6,500-6,600 levels in the week ahead,” Ravelas said.
Joyce Anne Ramos, an analyst at AB Capital Securities, said that aside from the disappointing results, investors grew concerned whether the country would grow within the government’s target of 6.5 to 7.5 percent this year.
Prior to the release of the GDP results on Thursday last week, she noted that the local index was trading at 21.47x price-to-earnings (P/E) ratio, relatively expensive compared to its Asian peers. Investors were willing to pay a premium to get hold of Philippine stocks given that the country was the second-fastest growing economy since 2012 after China, she said.–Doris C. Dumlao