Sustained recovery hinges on GDP growth

Philippine stocks may be finding their footing, but a sustained recovery is still hinged on third-quarter economic growth data beating market expectations.

Toby Allan Arce, head of sales trading at Globalinks Securities and Stocks Inc., said local shares may “remain volatile but with a cautiously positive bias next week …”

This, as the Philippine Stock Exchange Index (PSEi) recovered to 5,761.95 last week, showing investors’ appetite to take advantage of cheaper prices.

“[However], Friday’s modest pullback indicates that conviction remains fragile,” Arce said.

The release of the latest gross domestic product (GDP) data is expected to be this week’s biggest domestic catalyst.

“A stronger-than-expected reading could reinforce the market’s recovery, while disappointing growth would raise concerns about corporate earnings and the economic impact of elevated inflation and interest rates,” Arce said.

“Investors will also continue assessing third-quarter corporate results, particularly whether companies can sustain earnings growth despite higher financing costs and pressure on household purchasing power,” he added.

Based on a poll conducted by the Inquirer, Philippine GDP growth is seen rising 2.8 percent in the July-September period from the previous quarter’s 2.4 percent.

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Official data will be released on Monday.

“The market has shown some encouraging signs of stabilization, but a durable recovery will require improving economic visibility, sustained foreign participation and greater confidence that inflationary pressures are beginning to ease,” Arce said.

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