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Philippine Stocks Plunge Most Since Sept. 2011 on Jobs, Exports

Philippine stocks slumped, heading for the biggest loss since September 2011, after the nation’s unemployment rate climbed to a three-year high and exports contracted more than expected.

The Philippine Stock Exchange Index slumped 4.6 percent to 6,556.65 at the close in Manila, ending a three-day rally. The measure’s 30-day volatility climbed to 27.9, the highest since November 2011, and valuations dropped to a four-month low. Unemployment increased to 7.5 percent in the three months through April, the highest since the quarter ended June 2010, the National Statistics Office said today. Exports shrank 12.8 percent in April, the office said, exceeding the 5.3 percent median of 12 estimates in a Bloomberg survey.

“The high unemployment rate casts a shadow of doubt on the strength of economic growth and its sustainability,” Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank Inc. “Whether the perception is right or wrong, it raises questions. The exports data highlights the world economy remains fragile.”

The jobless rate increased even after the government reported on May 30 gross domestic product expanded 7.8 percent in the three months ended March, the fastest pace in almost three years. The economy will grow 6 percent to 7 percent this year, according to official forecasts.

Stimulus Concerns

Ayala Land Inc., the largest property developer, sank 6.5 percent, the biggest contributor to the benchmark index’s decline. Philippine Long Distance Telephone Co., the nation’s biggest phone company, lost 4.2 percent, the most since Jan. 26, 2012.

SM Investments Corp., owner of the nation’s biggest mall developer and the largest department store and grocery store operators, plunged 5.5 percent, the largest decline since April 3, 2012. International Container Terminal Services Inc., the nation’s biggest port operator, slumped 3.3 percent.

The Philippine Stock Exchange Index has retreated 11 percent since closing at a record 7,392.20 on May 15. The benchmark gauge has tumbled since U.S. Federal Reserve Chairman Ben S. Bernanke’s comment on May 22 that policy makers could consider reducing the pace of monetary stimulus triggered a selloff by overseas investors.

Still, the measure has gained 13 percent this year, heading for a fifth annual advance, boosted by better-than-expected economic growth, low interest rates and as the nation won two upgrades in sovereign debt rating to investment grade.

The index is trading at 18.3 times projected 12-month earnings, the cheapest since Feb. 4, compared with a record 20.8 multiple reached on May 15.

Overseas funds have sold a net of $70.9 million of Philippine equities since May 22, paring this year’s net purchases to $1.52 billion.

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