Philippine stocks declined Tuesday ahead of the US inflation data release this week.
The Philippine Stock Exchange index lost 5.26 points, or 0.09 percent, to close at 6,110.77, while the broader all-shares index slipped by 9.24 points, or 0.28 percent, to settle at 3,286.28.
Philstocks Financial Inc. research analyst Claire Alviar said investors were waiting for US inflation data while monitoring the meeting between US President Joe Biden and China President Xi Jinping.
The slowdown in bank lending in September also dampened investors sentiments.
“Many were still on the sidelines with net market value turnover recorded at P2.49 billion,” Alviar said.
Meanwhile, analysts from Manulife Investment Management and Trust Corp., said the economic growth outlook would affect the overall market performance in the fourth quarter of 2023 and early 2024.
Mark Canizares, head of equities, at Manulife Investment Management and Trust, said the improvement in gross domestic product growth from 4.3 percent in the second quarter to 5.9 percent in the third quarter was driven by the recovery in government spending growth at 6.7 percent, following a 7.1-percent contraction in the previous quarter.
“It helped that consumer spending remains stable despite elevated inflation, with household consumption growth at 5 percent. As long as government spending holds at these levels, there is a potential that we could see sustained economic growth going into the following quarters,” Canizares said.
Consumption spending, accounting for around two-thirds of the Philippines economy, continues to rise, which typically sets us apart from regional peers who rely more on trade and tourism amid a slowing global economy.
The recent deceleration of inflation, as seen in November, and peaking interest rates could boost the Philippine economic growth trajectory into 2024, he said.
Jean Olivia De Castro, head of fixed income at Manulife Investment, said the high inflation and interest rate environment would continue challenging growth.
“Despite a rebound in 3Q, growth in household consumption has been steadily declining every quarter since last year as high inflation erodes households’ purchasing power. Similarly, high interest rates discouraged the private sector from borrowing, dampening private investment. As we don’t expect the macroeconomic backdrop to change drastically over the next quarter, there remain downside risks to growth in the next few quarters,” De Castro said.
“We will closely monitor developments on inflation, which will dictate the direction of interest rates. We expect the Bangko Sentral ng Pilipinas to remain focused on containing inflation, evidenced by its 25 bps off-cycle hike in late October. While upside risks to inflation remain, our base case outlook is for the BSP to keep policy rates steady for the remainder of 2023. The improvement of government spending in 3Q was a welcome change, and we hope this continues in the 4Q to keep the growth momentum intact,” she said.
Philippine stocks declined Tuesday ahead of the US inflation data release this week.
The Philippine Stock Exchange index lost 5.26 points, or 0.09 percent, to close at 6,110.77, while the broader all-shares index slipped by 9.24 points, or 0.28 percent, to settle at 3,286.28.
Philstocks Financial Inc. research analyst Claire Alviar said investors were waiting for US inflation data while monitoring the meeting between US President Joe Biden and China President Xi Jinping.
The slowdown in bank lending in September also dampened investors sentiments.
“Many were still on the sidelines with net market value turnover recorded at P2.49 billion,” Alviar said.
Meanwhile, analysts from Manulife Investment Management and Trust Corp., said the economic growth outlook would affect the overall market performance in the fourth quarter of 2023 and early 2024.
Mark Canizares, head of equities, at Manulife Investment Management and Trust, said the improvement in gross domestic product growth from 4.3 percent in the second quarter to 5.9 percent in the third quarter was driven by the recovery in government spending growth at 6.7 percent, following a 7.1-percent contraction in the previous quarter.
“It helped that consumer spending remains stable despite elevated inflation, with household consumption growth at 5 percent. As long as government spending holds at these levels, there is a potential that we could see sustained economic growth going into the following quarters,” Canizares said.
Consumption spending, accounting for around two-thirds of the Philippines economy, continues to rise, which typically sets us apart from regional peers who rely more on trade and tourism amid a slowing global economy.
The recent deceleration of inflation, as seen in November, and peaking interest rates could boost the Philippine economic growth trajectory into 2024, he said.
Jean Olivia De Castro, head of fixed income at Manulife Investment, said the high inflation and interest rate environment would continue challenging growth.
“Despite a rebound in 3Q, growth in household consumption has been steadily declining every quarter since last year as high inflation erodes households’ purchasing power. Similarly, high interest rates discouraged the private sector from borrowing, dampening private investment. As we don’t expect the macroeconomic backdrop to change drastically over the next quarter, there remain downside risks to growth in the next few quarters,” De Castro said.
“We will closely monitor developments on inflation, which will dictate the direction of interest rates. We expect the Bangko Sentral ng Pilipinas to remain focused on containing inflation, evidenced by its 25 bps off-cycle hike in late October. While upside risks to inflation remain, our base case outlook is for the BSP to keep policy rates steady for the remainder of 2023. The improvement of government spending in 3Q was a welcome change, and we hope this continues in the 4Q to keep the growth momentum intact,” she said.
