(Bloomberg) -- Philippine stocks slumped the most in two months as overseas funds dumped the nation’s equities after remittances from overseas Filipinos in March contracted the most in two years.
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Overseas remittances, which account for about a 10th of gross domestic product, fell 4.7% in March from a year earlier, the most since March 2018. The central bank on Thursday forecast the funds to decline 5% this year, their first contraction since 2001.
The drop spells weak consumer spending, adding pressure to a market already bound to retreat given the benchmark stock index’s valuation close to its 10-year average, said Rachelle Cruz, analyst at AP Securities Inc. in Manila.
“Those looking to buy the dip should stick to strong stocks that are still discounted at this point,” Cruz said. She recommends shares of Metropolitan Bank & Trust Co., LT Group Inc., Alliance Global Group Inc. and Metro Pacific Investments Corp.
IPO
Stocks also dropped as they played catch up with Friday’s selloff in regional markets when the Philippines was on holiday, according to Lex Azurin, an analyst at AB Capital Securities Inc. President Rodrigo Duterte is also due to decide Monday whether quarantine restrictions will be eased.
On the bright side, grocer MerryMart Consumer Corp. soared 50% on its first trading day after completing a 1.6 billion peso ($32 million) initial public offering. Chief Executive Officer Edgar ‘Injap’ Sia said the retailer sees more opportunities to grow amid the pandemic.
Overseas investors sold $23.46 million in Philippine equities, the biggest withdrawal since April 16 and paring this month’s inflow to $38.3 million.
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