Bear market period: Yes, but not just yet
DEN SOMERA
I got involved into a big discussion over the weekend in what to make out of the market’s further fall last Friday. The market closed at 7,063.20, down by another 34.95 points or 0.49 percent.
This was actually the smallest in the market’s total losses for the week of 466.34 points or 6.19 percent broken down as follows: 115.53 points on Monday, 101.50 points on Tuesday, 50.99 points on Wednesday and 163.47points on Thursday.
Foreign investors also had a big hand in the market’s action to head south further. They again turned sellers more than buyers for the period.
Out of their total transactions of P41.66 billion for the week, they had a total buying transaction of P17.53 billion and selling transaction of P24.14 billion.
The direction of their trading tack was further reinforced by the sheer magnitude of their transactions to total market value turnover. They stayed high at 61.04 percent on Monday, 60.73 percent on Tuesday, 58.85 percent on Wednesday, 54.20 percent on Thursday, and 55.91 percent on Friday, for an average of 58 percent.
Lastly, total value turnover was relatively high at P456.42 billion. This considerably brought up the market’s daily average to P7.18 billion and significantly closer to the year-to-date figure of P7.69 billion.
Impact on asset values
Just how much did this continuing drop of the market has in the valuations of everyone’s investment portfolios?
For the week, a total of at least P770 billion in market value went up in smoke.
Badly hit were the 30 component stocks of the benchmark Philippine Stock Exchange index (PSEi) and some of the non-component but highly traded stocks among retail investors like information communications technology cum telco aspirant NOW Corporation (NOW), life and non-life reinsurance service provider National Reinsurance Corporation of the Philippines (NRCP), gaming operator Bloomberry Resorts Corporation, cement manufacturing firm Holcim Philippines, Inc. (HLCM), and property development and renewable energy aspirant company MRC Allied, Inc.
NOW was number 4 among last week’s top 30 price losers with a loss in market price of 16.67 percent for the week and 21.79 percent four weeks ago.
Next was NRCP in number 7. Its market price fell by 14.63 percent on thin volume and small value turnover. At this closing price,NRCP is now 45.60 percent below its 52-week high of P1.93 per share.
At number 8 was BLOOM. Its market price slipped 14.25 percent for the week and remained down by 16.86 percent from its price four weeks ago.
Also in the list at number 13 was Philex Energy Corporation. It fell 12 percent last week but curiously down 9.84 percent only from its price four weeks ago.
HOLCM and MRC were number 17 and 24 in the list of the top 30 price losers for the week, respectively.
HOLCM, in particular, dropped 11.32 percent for the week and 14.61 percent from its price four weeks ago.
MRC, on the other hand, curiously fell only by 9.52 percent last week and by 12 percent from its price four weeks ago.
Among the notable 30 component stocks of the PSEi that were also in the list of top losers for the week were PLDT, Inc. (TEL) and JG Summit Holdings, Inc. (JGS).
At number 10 and 12, respectively, were JGS and TEL. JGS’s market price dropped by 13.05 percent last week and by 17.66 percent four weeks ago. TEL, at the other end, was down by 12.64 percent last week and by 17.90 percent from its price four weeks ago.
In the game
None was spared from the market’s continued fall last week. The biggest casualty, however, was Small Time Trader. Among the stocks held by Small Time Trader were in the list of the top 30 price losers last week. This badly decimated the total value of his investment portfolio down to 89.28 percent or 17.01 percent lower a week before.
Small Time Trader’s valuation problem was compounded by the declining market price of Oriental Petroleum and Minerals Corporation. He holds a large exposure in the oil company whose market price seemed to move sideways since Saudi Arabia signaled its intention to pump more oil to stem the rising price of the commodity in the world market.
The next biggest casualty was Dud67. With all of his three stockholdings among the top 30 price losers for the week, his investment portfolio again dropped by another 10.51 percent.
Table 1 is the summary of the investments and performance standings of the players for Week 16 ending June 22, 2018.
Bottom line
With the market’s further fall last week, we have technically fallen into bear country. From its 52-week session’s high of 9,078.37, the market was down by as much as 2,015.17 points or 22.19 percent. An estimated total asset value of P4 trillion went up in smoke as well.
Are we now in a bear market period? The answer I’d like is the one I heard over the weekend which said, “Yes, but not just yet.” We still have a preponderance of positive fundamentals that can support an active healthy market. Also, while bear markets are partly based on actual investment performance, they’re also partly based on investors’ psychology.
Den Somera is a licensed stockbroker. The article has been prepared for general circulation for the reading public and must not be construed as an offer, or solicitation of an offer to buy or sell any securities or financial instruments whether referred to herein or otherwise. Moreover, the public should be aware that the writer or any investing parties mentioned in the column may have a conflict of interest that could affect the objectivity of their reported or mentioned investment activity. E-mail address of the writer is den.somera@manilatimes.net
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