Stocks retreated Tuesday to end a three-day rally on profit-taking and following reports China’s economy, the second largest in the world, grew at its slowest pace in four decades last year.
The PSE index, the 30-company benchmark, lost 31 points, or 0.45 percent, to close at 7,014.04, as four of the six subsectors declined.
The broader all-share index also fell 17 points, or 0.47 percent, to settle at 3,657.92, on a value turnover of P10.14 billion. Losers outnumbered gainers, 111 to 77, while 38 issues were unchanged.
Five of the 10 most active stocks ended in the green, led by Jollibee Foods Corp. which gained 1.61 percent to P252.00 and SM Prime Holdings Inc. which rose 1.46 percent to P38.30.
Most Asian markets also traded lower Tuesday. China’s economy grew 3 percent in 2022, the worst since 1976 — excluding pandemic-hit 2020—and sharply down from the previous year, as widespread lockdowns and other containment policies hammered business activity.
However, it beat the 2.7 percent forecast and the fourth-quarter reading also topped estimates, while a healthy reading on retail sales provided extra cheer.
There is now growing optimism that the reopening that started last month will fuel a strong rebound this year and help support the global economy as central banks try to avert a recession caused by soaring inflation and interest rate hikes.
“Looking forward, we expect to see a sustained economic recovery in 2023 as a result of reopening and policy stimulus,” said Chaoping Zhu, of JP Morgan Asset Management.
“Service sectors should be the early beneficiary when pent-up demand is released.”
Regional markets, however, struggled to maintain the strong momentum that has characterized trading at the start of the year, which has been powered by China hopes and signs that the battle against inflation appears to be turning in central banks’ favor.
Hong Kong, which had piled on more than nine percent so far this year, reversed, while Shanghai, Sydney, Seoul, Singapore and Bangkok were also in negative territory.
There were gains though in Tokyo, Wellington, Taipei, Mumbai and Jakarta.
Still, analysts remain upbeat.
“We are in the early phase of recovery in terms of asset prices,” said Paras Anand, at Artemis Investment Management.
“A recovery or normalization of the Chinese economy will be positive for global growth at the margin.”
Traders are now awaiting a key policy decision by the Bank of Japan on Wednesday, which comes after it last month surprised markets by announcing a shift away from its ultra-loose monetary policy, sending the yen soaring.
The bank has kept a tight rein on bond yields for years in an attempt to kickstart economic growth, but it came under pressure in recent months as other countries ramped up interest rates to fight inflation, pushing the yen to multi-decade lows.
Speculation is now swirling that it will further tweak policy or indicate that another adjustment is in the pipeline.
“We’ve seen some good moves for Asian stocks this year, particularly China, and with the BoJ meeting looming and its potential to be a huge risk event, it’s logical to see some risk be taken off of the table,” City Index’s Matthew Simpson said. With AFP