The stock market and the peso slumped Thursday after a government report showing economic growth slowing down to a four-year low of 5.6 percent in the first quarter of 2019.
The Philippine Stock Exchange Index tumbled 171.07 points, or 2.2 percent, to 7,755.62 on a value turnover of P9.2 billion. Losers beat gainers, 109 to 88, with 43 issues unchanged.
The peso also weakened to 52.309 against the US dollar Thursday from 52.11 the previous day ahead of the late policy meeting of the Monetary Board.
Economic Planning Secretary Ernesto Pernia blamed the delay in the approval of the 2019 budget to the sluggish economic expansion, the slowest growth rate recorded in 16 quarters, or since the economy grew 5.1 percent in the first quarter of 2015.
“As we have forewarned repeatedly, the re-enacted budget would sharply slow the pace of our economic growth,” Pernia said in a briefing. He said the economy “should have grown by as much as 6.6 percent this first quarter if we were operating under the 2019 fiscal program.”
BDO Unibank Inc., the biggest lender in terms of assets, fell 4.2 percent to P134, while Bank of the Philippine Islands, the third-biggest bank, dropped 3.4 percent to P82.50.
Aboitiz Equity Ventures Inc. declined 3.5 percent to P51.20, while International Container Terminal Services Inc., the biggest port operator, lost 4.2 percent to P134.
The rest of Asian markets once again fell into the red on Thursday as investors anxiously await the start of high-stakes trade talks between China and the United States.
After several rounds of negotiations, the two-day meeting in Washington, which kicks off later in the day, has taken on huge significance after Donald Trump threatened to ramp up tariffs on Chinese goods from Friday blaming backsliding by Beijing.
The president’s remarks Sunday battered global equities and fueled fears the economic superpowers—who appeared just last week to be nearing a deal—could become entangled in a brutal trade war with worldwide consequences.
In afternoon trade Hong Kong stocks were hammered more than two percent while Shanghai ended 1.5 percent lower and Tokyo sank 0.9 percent.
Seoul plunged more than three percent, while Singapore, Taipei, Jakarta and Mumbai were also sharply lower. But Sydney and Wellington each chalked up 0.4 percent gains.
While Trump has looked to soothe concerns—telling a rally Wednesday that “whatever happens, don’t worry about it. It will work out. It always does”—investors are on edge.
China, for its part, said an escalation was “not in the interests of the two countries’ people” but warned it would impose “necessary countermeasures” if the tariffs on $200 billion of goods were more than doubled Friday.
Commenting on the visit to Washington of China’s top negotiator, Neil Wilson, chief market analyst at Markets.com, said: “So is Liu He really coming to do a deal? I think probably it’s (a) case of gaining a reprieve in order to avert the rise in tariffs.
“It looks like we are yet a wee bit away from a comprehensive trade deal. But the Vice Premier’s visit and the prospect of tariffs being hiked is all a bit of an unknown right now and the market positioning is defensive as a result.” With AFP