PSEi may extend slide as flood scandal escalates

By Alexandria Grace C. Magno

PHILIPPINE STOCKS may continue to fall this week as persistent political turmoil and soft economic data keep risk appetite subdued, analysts said.

“Local equities slumped to a five-year low as fresh controversies emerged from the flood-control scandal,” online brokerage 2TradeAsia said in a note.

The Philippine Stock Exchange index (PSEi) dropped 2.49% to 5,584.35 on Friday, its weakest close since May 2020. The broader all-share index declined 4.1% to 3,260.26.

Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said the market remains on a downtrend, with the index now trading at levels last seen during the pandemic. “Negative developments continue to sustain the bearish sentiment,” he said in a Viber message.

He expects the bourse to stay under pressure this week, as a weak macroeconomic backdrop is further undermined by political noise. Signals of deteriorating confidence followed a 4% economic growth in the third quarter — the slowest in more than four years — and continued weakness in foreign direct investment (FDI).

Growth last quarter fell well short of the market’s expectation of above 5%, dragged by corruption allegations involving infrastructure spending that dampened sentiment. Net FDI inflows dropped 40.5% in August to $494 million, bringing the eight-month total to $5.179 billion, down 22.5% year on year.

“The bourse could move down further as investors contend with lingering corruption issues,” Mr. Tantiangco said. “Offshore worries — including concerns about stretched AI (artificial intelligence) valuations and fading hopes for US rate cuts — may also add to the pessimism.”

Political tensions escalated late last week after former Party-list Rep. Elizaldy S. Co published a list of projects he claimed the President had ordered inserted into the 2025 budget. Mr. Co later alleged that cash deliveries linked to the P100-billion allocation reached Forbes Park and Malacañang, urging an Ombudsman probe into President Ferdinand R. Marcos, Jr. and former Speaker Ferdinand Martin G. Romualdez, Sr.

Analysts said the market needs a strong positive catalyst to break its downtrend.

Technically, the PSEi has fallen below 5,600, a key support level. “If the market is unable to get back above the said line, it will be considered as its immediate resistance while next support is seen at 5,400,” he added.

2TradeAsia said investors might stay on the sidelines as the index trades below levels last seen during the coronavirus lockdowns. “Funds may pause until a firmer base emerges,” it said, pegging support at 5,400 and resistance at 5,800.