LOCAL SHARES closed higher on Thursday as investors ignored the economic contraction reported in the first quarter and instead went bargain hunting on the market.

The bellwether Philippine Stock Exchange index (PSEi) went up 13.89 points or 0.24% to end at 5,653.16 in yesterday’s session. The broader all shares index slipped 2.17 points or 0.06% to 3,413.88.

“Philippine shares traded on a positive note as investors brushed off the contraction in 1Q GDP (first quarter gross domestic product) with a possibility that the country may ease the lockdown after May 15 as mentioned by the administration,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said.

The government reported on Thursday that the economy contracted by 0.2% in the first quarter, the first time it sank since 1998 to end 82 quarters of uninterrupted growth.

This is below the 2.9% median estimate in BusinessWorld’s poll of 11 economists and the 6.5%-7.5% target range of the government.

Despite this, the local bourse still managed to end the day with gains, as Mr. Limlingan said investors believed “the country may have soon reached the bottom, and the reopening of economy is soon and imminent.”

The PSEi opened at 5,661 and traded lower for most of the day, hitting a low of 5,599 and reaching a high of 5,670 before closing at 5,653.

AAA Southeast Equities, Inc. Research Head Christopher John Mangun said the lack of selling drew in buyers that took advantage of cheaper stock prices.

“This allowed the main index to end the day close to its high for the day. We may see more profit taking (on Friday), being the last day of the trading week,” he said in an e-mail.

For Philstocks Financial, Inc. Research Associate Piper Chaucer E. Tan, the market was consolidating yesterday as seen in the decreased value trading. Value turnover was slower at P4.86 billion from P6.05 billion a day ago. Some 477.90 million issues switched hands from the previous day’s 561.48 million.

“We think that investors with this kind of market performance are on wait and see mode with weaker trading participation in terms of value turnover for the local bourse,” Mr. Tan said in a text message.

Sectoral indices were divided evenly among gainers and losers yesterday. On the one hand, property rose 50.98 points or 1.74% to 2,970.92; financials added 3.05 points or 0.26% to 1,160.69; and holding firms picked up 10.56 points or 0.19% to 5,529.79.

On the other hand, services dropped 22.27 points or 1.65% to 1,325.06; mining and oil lost 58.46 points or 1.27% to 4,512.07; and industrials fell 68.68 points or 0.93% to 7,312.14.

Some 112 names declined, 63 advanced and 42 ended unchanged yesterday.

Net foreign selling persisted at P302.23 million, although lower than the P969.47 million seen the prior day. — Denise A. Valdez