"PSEi Falls to Over Two-Year Low: What's Behind the Market Plunge?

PSEi Falls to Over Two-Year Low: What's Behind the Market Plunge?The Philippine Stock Exchange index (PSEi) plummeted 4.01 percent, closing at 5,862.59 – its lowest point since October 12, 2022. The decline comes as investors digest below-target economic growth and worry about the pace of interest rate cuts.GDP Growth Falls ShortThe peso also weakened, dropping by eight and a half centavos to P58.365, following the government's announcement of gross domestic product (GDP) growth for 2024 at 5.6 percent, which fell short of the target range of 6.0-6.5 percent.Bear Market in Sight?According to Franco Fernandez, an equity research analyst at DragonFi Securities Inc., the PSEi has "entered a bear market," tumbling 22.9 percent from its October 7, 2024 intraday high of 7,604.61. This sharp decline was driven by a PSEi rebalancing, which lowered the weightings of most index constituents to accommodate the inclusion of Areit and Chinabank.Expert InsightsAs the market navigates this challenging terrain, experts caution against further declines. "We are close to the market's critical support at 5,700, but barring any negative surprises this weekend, we may see a relief rally by next week," said Juan Paolo Colet, Managing Director of China Bank Capital Corp.Uncertainty AheadIn this uncertain market environment, investors are left wondering what lies ahead. Will the economy recover from its sluggish pace? Will interest rates continue to ease or tighten? The answers will depend on various factors, including global economic trends and domestic policies.Key Takeaways:• PSEi fell by 245.07 points or 4.01 percent, closing at 5,862.59 – its lowest point since October 12, 2022.• GDP growth for 2024 was disappointing, falling short of the target range.• The peso weakened by eight and a half centavos to P58.365.• A bear market is possible, with the PSEi tumbling 22.9 percent from its October 7, 2024 intraday high.Staying InformedAs the market continues to evolve, it's essential for investors to stay informed and adapt their strategies accordingly. Consider consulting with a financial advisor or conducting further research to make informed decisions about your investments.Keywords: PSEi, GDP growth, Philippine Stock Exchange, bear market, economic trends, interest rates.

Edward Lance Arellano Lorilla

CEO / Co-Founder

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