GDP growth concerns drag down index

MANILA, Philippines - Share prices closed lower yesterday, dragging down the main composite index below the 7,400 mark as investors took a cautious stance on expectation of a slower economic growth in the second quarter of the year.

The benchmark declined 71.60 points, or 0.96 percent, to close at 7,336.84, while the broader All Shares index shed 53.56 points or 1.26 percent, finishing at 4,191.43.

Trading was light, with value turnover reaching P6.25 billion. Decliners edged out advancers, 144 to 38 with 43 stocks left unchanged.

Joseph Roxas, president of Eagle Equities, said investors are worried over the second quarter gross domestic product (GDP) growth rate, with government spending still down. “I think it’s the GDP,” Roxas said.

“Although consumer spending may be up because of lower crude prices, state spending is still down,” he said.

The country’s GDP growth slowed down to 5.2 percent in the first quarter of the year from 5.6 percent in the same quarter last year amid weak government spending.

The government expects GDP growing between seven and eight percent this year.

Roxas said investors are also worried of the gaming slump after the country’s casino operators reported losses in the first half of the year due to mounting costs and slower than expected gaming revenues.

“It may also because of what’s happening to the gaming sector,” Roxas said.