THE MAIN INDEX fell on Friday as foreign investors reacted to Philippine gross domestic product (GDP) data showing the economy shrank by 16.5% in the second quarter.

The 30-member Philippine Stock Exchange index (PSEi) gave up 56.56 points or 0.95% to close at 5,846.02 on Friday. The broader all shares index also lost 18.08 points or 0.51% to end at 3,467.53.

“Local shares were sold off as foreign funds reacted late towards the second quarter reading of GDP which came in weaker than expected,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a mobile message.

The Philippine Statistics Authority reported on Thursday that the economy contracted by 16.5% in the second quarter, its worst decline on record, due to the shutdown of most sectors since mid-March to contain the coronavirus outbreak. This plunged the country into a recession for the first time in nearly 30 years.

The GDP drop is deeper than the 0.7% decline in the first quarter and worse than the 11% median estimate of 17 economists polled by BusinessWorld last week.

Foreign investors returned to selling, recording net outflows of P6.78 billion on Friday from net inflows of P551.31 million on Thursday.

The worsening health situation, with the Philippines now leading Southeast Asia in the highest number of coronavirus cases, also worried investors.

“Investors are having a hard time trying to see the light at the end of the tunnel as we are almost in the middle of the third quarter and coronavirus cases continue to climb,” AAA Southeast Equities, Inc. Research Head Christopher John Mangun said in an email.

“Projection for the economy for the whole year has become dimmer with the government downwardly revising its forecast from the -2% to -3.4% range to -5.5%,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco added.

Half of the sectoral indices ended Friday’s session in red territory. Financials slid 21.13 points or 1.84% to 1,121.71; holding firms cut 94.36 points or 1.55% to 5,972.80; and property trimmed 38.69 points or 1.35% to 2,812.12.

The gainers were mining and oil, which increased 139.28 points or 2.45% to 5,812.40; services, which added 23.82 points or 1.7% to 1,421.18; and industrials, which climbed 42.57 points or 0.55% to 7,715.63 at the end of session.

Value turnover improved to P10.92 billion on Friday from P6.53 billion the previous day. Some 5.27 billion issues switched hands. Advancers beat decliners, 113 against 82, while 46 names ended unchanged.

“Supportive monetary policy adjustments or more fiscal stimulus from the government will strengthen the economy’s recovery and will also improve investors sentiment. The market may continue sideways until this happens,” Mr. Mangun said. — Denise A. Valdez

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