PH growth in Q2 boosts stock market
MANILA, Philippines (2nd UPDATE) - After a recent bloodbath, the Philippine Stock Exchange main index bounced back. On Thursday, August 29, the PSEi ended surged 206.15 points or 3.59% to close at 5,944.21.
The day before, the PSEi wiped out its gains for the year. The index plunged 3.88% to 5,738.06 as traders grew jittery.
Traders cited the strong gross domestic product (GDP) growth data released Thursday morning, as well as recovery in Wall Street and regional markets as reasons for the index's jump.
The government announced the better-than-expected second quarter economic growth figures, boosting the local capital market, which has been reeling from months of decline as "hot money" flows out.
Since June, foreign investors have been pulling out of emerging economies in expectation of an end to the US Federal Reserve's stimulus.
The Philippine economy expanded 7.5% in the April-June quarter, making it still the fastest growing in Southeast Asia and in line with growth of regional power house China's performance.
The healthy growth rate — thanks to an increase in government spending, revival of manufacturing, and growth in consumer spending — provided a welcome boost at a time when the country's stock market and currency suffer a slump.
These recent data are a sharp improvement from the 6.4% seen in the same period in 2012, the National Statistical Coordination Board said. This also marks the 4th straight quarter of growth above 7%.
Socio-economic Planning Secretary Arsenio Balisacan said the news indicated that growth in 2013 would be higher than initially forecast.
"I think we will likely surpass the target growth of 6% to 7% percent for the full year. What we have to sustain now is investment in order to create quality jobs," he told reporters.
"We are in a better position than many of the emerging economies," he said.
His comments come as the Philippines — like several emerging markets around the world — sees huge outflows of cash that had been pumped into the economy over the past year as the Fed kept interest rates ultra-low.
The foreign withdrawal has seen markets from Manila to Jakarta to Bangkok slump in recent weeks and their currencies tumble.
The Philippine peso has fallen about 8.5% against the dollar since May.
But while Balisacan said the economy had been affected the fears over the Fed's stimulus programme, he added: "It is important to recognize the volatility is largely externally driven," he said.
Finance Secretary Cesar Purisima highlighted this in a statement on Thursday.
“This… makes a strong case to differentiate the Philippines from other emerging market countries, which tend to be resource-driven and export-dependent. I am confident that market players will recognize the strong fundamentals of the country," Purisima said.
Emilio Neri, corporate economist of Bank of the Philippine Islands, one of the country's top lenders, told AFP the high growth figures for the first half were "a fairly rare feat considering that everybody else is going down."
The Philippines has avoided the worst because it had not been to dependent on foreign funds and did not borrow too much abroad at the height of the US Fed's easy money policy.
"We did not get a hangover from this party that the US Federal Reserve hosted," Neri added. - Rappler.com and Agence France Presse