MANILA: Philippine stocks slumped, heading for the biggest loss since September 2011, after the nation’s unemployment rate climbed to a three-year high and exports contracted more than expected.
The Philippine Stock Exchange Index slumped 4.4 per cent to 6,574.60 at 2.36pm in Manila on 11 June. The measure’s 30-day volatility climbed to 27.6 – the highest since November 2011, and valuations dropped to a four-month low.
Unemployment increased to 7.5 per cent in the three months through April, the highest since the quarter to June 2010, the National Statistics Office said on 11 June.
Exports shrank 12.8 per cent in April, the office added, exceeding the 5.3 per cent median of 12 estimates in a Bloomberg survey.
“The high unemployment rate casts a shadow of doubt on the strength of economic growth and its sustainability,” Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank. “Whether the perception is right or wrong, it raises questions. The exports data highlights the world economy remains fragile.”
The jobless rate increased even after the government reported on 30 May that gross domestic product expanded 7.8 per cent in the three months to March, the fastest pace in almost three years. The economy will grow 6 per cent to 7 per cent this year, according to official forecasts.
Philippine Long Distance Telephone Co (PLDT), the nation’s biggest phone company, sank 4.4 per cent, the most since 26 January 2012. The stock is the biggest contributor to the benchmark index’s decline on 11 June.
SM Investments Corp, owner of the nation’s biggest mall developer and the largest department store and grocery store operators, plunged 5.3 per cent, the largest decline since 24 August 2012. International Container Terminal Service (ICTSI), the nation’s biggest port operator, slumped 4.4 per cent.
The Philippine Stock Exchange Index has retreated 11 per cent since closing at a record 7,392.20 on 15 May. The benchmark gauge has tumbled since US Federal Reserve Chairman Ben Bernanke’s comment on 22 May that policy makers could consider reducing the pace of monetary stimulus triggered a selloff by overseas investors.
Still, the measure has gained 13 per cent this year, heading for a fifth annual advance, boosted by better-than-expected economic growth, low interest rates and as the nation won two upgrades in sovereign debt rating to investment grade.
The index is trading at 18.3 times projected 12-month earnings, the cheapest since February, compared with a record 20.8 multiple reached on 15 May.
Overseas funds have sold a net of US$70.9 million of Philippine equities since 22 May, paring this year’s net purchases to US$1.52 billion.
(BLOOMBERG)
