PSEi skids anew (November stock market report)

The month of November saw the Philippine Stock Exchange index (PSEi) skidding anew after it looked like the PSEi was set to surge to the 8,000-point territory.

Various factors negatively impacted investor sentiment, with the pronouncement of US president-elect Donald Trump on increased tariffs for imported products and the disappointing 5.2% gross domestic product (GDP) growth for the third quarter among the major concerns.

Meanwhile, the slightly higher inflation rate in October of 2.3% was still taken in good stride by the market.

In summary, the PSEi opened at 7,136.10 and closed at 6,613.85 in November, for a substantial decrease of 7.32%.

The highest close for the month was 7,257.94 on Nov. 5 while the lowest close was on Nov. 14 at 6,5507.89.

Of the 20 trading days in November, the PSEi closed above 7,000 for only four days, or consecutively from Nov. 4 to 7.

FOUR-DAY RALLY STARTS THE MONTH

The first four trading days of November was still good for investors, up to announcement of the 2.3% inflation rate for October, which was within the 2% to 4% of the government.

“The October inflation print came in at 2.3%, which was also below the midpoint of the Bangko Sentral ng Pilipinas’ (BSP) 2% to 2.8% projection,” said Philstocks Financial Inc. research manager Japhet Tantiangco.

However, the stock market almost took a beating right after the disappointing 5.2% GDP growth was announced on Nov. 7. The next trading day, or Nov. 8, the PSEi went below 7,000 points for the first time since Sept. 11.

Regina Capital managing director Luis Limlingan said that traders and investors also expected more market fluctuations with US economic policies still uncertain following Trump’s victory in the US presidential elections.

“The PSEi dropped to below the 7,000-mark due to slower Philippine economic growth and Trump’s US election win,” Limlingan said.

Tantiangco echoed the possible negative effects of Trump’s economic protectionist polices. “Investors continued to price in the possible implementation of protectionist policies in the US under a Trump Presidency and its negative impact on the global economy.”

“The slowdown in the Philippines’ economic growth in Q3 [third quarter] also continued to weigh on sentiment,” Tantiangco added.

Nonetheless, the government’s economists still sees some positive aspects in the third-quarter GDP growth.

The latest data brought the year-to-date GDP expansion to 5.8 percent, slightly under the 6-percent lower end of the government’s growth target for this year.

Nonetheless, government economists still see a silver lining in the third-quarter GDP growth.

“Our economy continues to grow steadily; the latest GDP figures indicate continuous expansion. Of the countries that have reported their third-quarter GDP growth rates, we remain one of the fastest-growing Asian economies,” said National and Economic Development Authority (NEDA) Secretary Arsenio Balisacan.

“We follow Vietnam, which posted a 7.4%growth rate, and are ahead of Indonesia (with 4.9%), China (4.6%), and Singapore (4.1%), ” he added.

MORE BAD TIMES AHEAD

The worst episode for the stock market in November was on the 14th, when the PSEi plunged below 6,600 for the first time since Aug. 13. It was also the seventh straight day that the stock index declined.

This was attributed to the bad mood toward US equities and the continued worries over Trump’s economic policies.

“Philippine shares broke past 6,600 to end at 6,557.09 as more funds continued to exit this week, while Wall Street ended flat,” Limlingan said.

“Locally, the PSEi extended its losses for a seventh straight session, impacted by the pullback in US equities,” Limlingan added.

However, the drop on Nov. 14 was followed by a four-day rally that saw the PSEi surpassing 6,900 points anew following a phone call between President Ferdinand R. Marcos Jr. and Trump.

“Philippine stocks extended its rally posting its biggest gain since February of 2023…As the market viewed the recent interaction call between Marcos and Trump under a positive note,” Limlingan said.

For last four trading days of November, however, the PSEi sustained a downtrend to settle at 6,613.86 on the last day of the month.

Besides the lingering worries over Trump’s policies, lower GDP growth in the fourth quarter and full-year 2024, there were also concerns on whether the BSP would reduce key policy rates in December, or pause.

To recall, the BSP reduced twice this year key policy rates for a total of 50 basis points, resulting in a policy rate of 6 percent.

The central bank was also wary of inflation picking up in November.

Meanwhile in the US, the Federal Reserve was also hesitant to commit to another policy rate reduction.

“The PSE again declined for the fourth straight trading day, down for the sixth day in seven trading days…after the BSP estimated some pick up in headline inflation for the month of November 2024 to a range of 2.2 to 3 percent from 2.3 percent in October 2024,” Rizal Commercial Banking Corp. chief economist Michael Ricafort said.

“The local market continued with its decline as investors remain concerned regarding president-elect Donald Trump’s tariff threats. Adding to the worries is the uncertainty on the Federal Reserve’s policy easing pace amid the uncertainties on the US economy,” Tantiangco said.

For the next months, investors will continue to monitor developments on Trump’s economic policies, the inflation rate for December and full-year 2024, the next policy rate meeting of the BSP, and the possible escalation of geopolitical conflicts.

(PHOTO FROM PNA)

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