Stocks down as PH stumbles in narrow path to ‘A’ credit rating
The stock barometer slipped on Friday as global credit watchdog Fitch Ratings tempered its Philippine sovereign credit outlook soon after first quarter local economic performance turned out weaker than expected.
The main-share Philippine Stock Exchange index (PSEi) shed 31.22 points or 0.55 percent to close at 5,621.94, as foreigners continued to dump stocks. The local market was outclassed by most markets in the region.
For the week, the PSEi lost a total of 78.77 points or 1.38 percent.
Fitch Ratings reverted back to its “stable” credit rating outlook for the Philippines after raising it to “positive” in February.
This rules out any new credit rating upgrade for the country in the next 18 to 24 months, blocking the country’s path to an A rating. Fitch kept the country’s credit score at BBB, the highest in the B tier.
“All three rating agencies now have stable outlooks, but S&P is the one to watch closely from here. We see a rising risk that S&P—which has a BBB+ rating, a notch above Fitch and Moody’s—could revise the outlook to ‘negative’ over the next six to 12 months. A key support for its rating upgrade to BBB+ last year was its assessment of a strong growth trajectory, which is now undermined by the COVID-19 shock and subsequent measures to contain the local outbreak,” Japanese investment house Nomura said in a recent research note.
The country’s gross domestic product (GDP) declined by 0.2 percent in the first quarter, underperforming market expectations of a 2.9-percent growth, based on a Bloomberg survey.
As lockdown measures to contain the spread of the new coronavirus started only in mid-March, the market expects further economic deterioration in the second quarter.
The decline in the stock market was led by the financial and property counters, which both fell by over 1 percent.
The industrial, holding firm and mining/oil counters all firmed up.
Value turnover for the day amounted to P5.86 billion. There was P771.2 million worth of net foreign selling for the day.
There were 90 decliners that edged out 75 advancers, while 55 stocks were unchanged.
Ayala Land and BPI dragged down the market, both losing over 3 percent, alongside SM Investments and Globe Telecom, which both tumbled by over 2 percent.
The PSEi’s decline was tempered by the gains of conglomerates Ayala Corp. and Metro Pacific, which surged by 6.34 percent and 4 percent, respectively.
The Zobels and Metro Pacific Chair Manuel V. Pangilinan recently mended fences with President Duterte. The two groups are about to negotiate new terms for the water concession contracts of Manila Water and Maynilad Water Services.
Outside of the PSEi, Manila Water surged by 8.55 percent. —DORIS DUMLAO-ABADILLA INQ
