Stocks to move sideways amid weak GDP, FDI watch

PHILIPPINE shares are expected to move sideways this week as investors digest the slower-than-expected third-quarter economic growth and await the release of foreign direct investment (FDI) data.

On Friday, the benchmark Philippine Stock Exchange index (PSEi) declined by 1.31% or 76.22 points to close at 5,759.37, while the broader All Shares index slipped by 0.81% or 28.86 points to 3,514.57. This marked the PSEi’s lowest finish in more than three years, or since it closed at 5,783.15 on Oct. 3, 2022.

“The Philippine market ended lower as selling pressure persisted following the release of GDP (gross domestic product) data, which came in widely below consensus,” said Regina Capital Development Corp. Head of Sales Luis A. Limlingan in a Viber message.

“Corporate earnings were not strong enough to offset the negative impact of the weaker GDP print and the depreciation of the peso to P59 per US dollar.”

Data from the Philippine Statistics Authority (PSA) showed that GDP expanded by 4% year on year in the third quarter, slowing sharply from 5.5% in the previous quarter and 5.2% in the same period a year earlier.

This was the weakest pace of growth in more than four years, as the economy was weighed down by weak capital spending and typhoon damage to agriculture, while public construction was affected by a corruption scandal involving state infrastructure projects that dampened sentiment.

Online brokerage 2TradeAsia.com said the economy’s slowdown reflected the combined impact of these domestic headwinds, although resilient 5.5% growth in services, led by finance and trade, together with expected holiday spending, could help cushion fourth-quarter activity.

“Sessions breached their lowest since October 2022 after the GDP came in less than expected at 4%,” the brokerage said. “The PSEi’s muted dip masks rotation potential — we reiterate safe plays for now, such as banks and dividend portfolios.”

For this week, Philstocks Financial, Inc. Assistant Manager for Research and Online Engagement Claire T. Alviar said the local bourse is likely to move sideways as cautious sentiment continues to weigh on investors.

“A strong FDI print could help lift confidence, but a disappointing result may reinforce the prevailing bearish mood,” Ms. Alviar said in a market note.

“Locally, the potential impact of an approaching super typhoon could further dampen sentiment, especially after the recent destructive typhoon in the Visayas.”

Last week, the government declared a state of national calamity after Typhoon Kalmaegi (locally named Tino) caused widespread damage in the Visayas and Mindanao. On Sunday, Super Typhoon Uwan was expected to hit areas still recovering from the previous storm.

Ms. Alviar added that concerns over a possible “AI-driven tech bubble” in overseas markets are also affecting risk appetite.

“Meanwhile, the local index failed to sustain its position above the 5,800 support level. Bargain hunting may help it retest this level, although strong resistance at the 6,000 mark remains,” she said.

2TradeAsia noted that third-quarter corporate earnings calls could offer selective trading opportunities but said a stronger market recovery would likely hinge on fiscal reforms and clearer signs of economic rebound by early next year.

“Recent themes underscore a low-conviction rate environment merging with domestic fiscal headwinds, tilting toward selective positioning over broad bets,” it said. “Expect funds to trim duration and rotate into defensive sectors — financials and consumer staples — which offer yield cushions amid GDP softness that risks spilling into the fourth quarter.”

The brokerage pegged the PSEi’s immediate support at 5,600 and resistance at 5,900 to 6,000. — Alexandria Grace C. Magno