ECONOMIC EXPANSION. The local stock barometer rose slightly on Thursday (May 11, 2023) due to the better-than-expected expansion of the Philippine economy in the first quarter of the year at 6.4 percent. However, the peso ended sideways amid an upward correction of the US dollar against other major currencies and increases in the prices of oil in the international market. (PNA graphics)
MANILA – Better-than-expected expansion of the Philippine economy in the first quarter of 2023 lifted further the local bourse’s main index on Thursday but the peso ended sideways against the United States dollar.
The Philippine Stock Exchange index (PSEi) rose slightly by 0.25 percent, or 16.87 points, to 6,675.46 points.
All Shares followed with a jump of 0.15 percent, or 5.38 points, to 3,551.48 points.
Majority of the sectoral indices also gained during the day, led by Property after it increased by 0.93 percent.
It was trailed by Services, 0.43 percent; Financials, 0.31 percent; and Holding Firms, 0.12 percent.
On the other hand, Mining and Oil slipped by 1.70 percent and Industrial by 0.28 percent.
Volume reached 23.28 billion shares amounting to PHP6.24 billion.
Decliners outpaced advancers at 98 to 66 while 62 shares were unchanged.
In a report, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort attributed the PSEi’s performance to the 6.4 percent annual expansion of the domestic economy in the first quarter of 2023, which surpassed expectations.
He said that while the domestic growth from January to March this year is slower than the 7.1 percent in the previous quarter and 8 percent last year, it remains robust despite the challenges due in part to the elevated inflation rate, as well as normalization of domestic economic output.
“The expected easing trend in year-on-year inflation for the coming months to about 5 to 6 percent from May-June 2023; 4 percent levels from July-September 2023; and 3 percent levels from October-December 2023, thereby could fundamentally support faster GDP (gross domestic product)/economic growth going forward amid reduced drag from inflationary pressures,” he added.
The rate of price increases sustained its deceleration for the third consecutive month last April when it posted a slower figure of 6.6 percent on an annual basis after hitting a 14-year high of 8.7 percent last January.
The average inflation to date stood at 7.9 percent, way higher than the government’s 2 to 4 percent target band.
Monetary officials forecast inflation to return to within-target levels by the last quarter of this year.
Ricafort said risks to inflation and growth will come from the looming El Niño phenomenon due to expected lower agricultural outputs and higher prices.
Amidt the rise in the main equities index, the peso ended the day sideways against the US dollar at 55.75 from USD55.67 on Wednesday.
Ricafort attributed this to the rise in the government’s debt-to-gross domestic product (GDP) ratio to 61 percent as of the first quarter of the year and the upward correction of global crude oil prices to among its one-week highs, among others.
He said the growth of the domestic economy in the first three months of the year also contributed to the peso’s performance during the day.
The local unit started Thursday at 55.58 and traded between 55.78 and 55.54. The average level stood at 55.672.
The volume went down to USD1.29 billion from USD1.41 billion the previous session.
Ricafort said the peso was also disadvantaged by the upward correction of the US dollar and the foreign selling in the local bourse.
For Thursday, he forecasts the currency pair to trade between 55.65 and 55.85. (PNA)
