Present market direction a guessing game
DEN SOMERA
Things don’t seem to work, much less happen, the way they do before. When the market closed for July last Tuesday, share prices closed lower instead of going up as they usually do on a number of reasons most particularly on the impact of window dressing by institutional fund managers to present a good appearance of
their investment portfolios.
The Philippine Stock Exchange Index (PSEi) fell 101.32 points or 1.30 percent to 7,672.00 while the broader All Shares lost 41.16 points or 0.89 percent to 4,604.12. Total value turnover was P7.054 billion, with decliners outpacing gainers 130 to 63.
These developments broke the market’s immediate five-day trading uptick.
Profit-taking by both local and foreign investors along with investors’ cautious stance ahead of the expected meeting of the Federal Open Market Committee (FOMC) – the policymaking body of the US Federal Reserve System charged with “the buying and selling of federal government bonds in order to influence money supply and interest rate – were blamed for driving the market down.
As echoed in newspapers, analysts agreed “the market was overdue for correction after five days of rally.”
Notwithstanding these explanations to justify the obvious fall of the market, things turned out differently on Wednesday, the first day of August.
The market pulled up a surprise. It bounced back from losses the previous day and coincidentally established positive start for August. The PSE jumped 166.22 points or 2.2 percent when it closed at 7,838.22 on an almost similar value turnover the previous day at P7.2 billion.
Strong buying transactions in blue chips fueled the rally, encouraged by initial favorable corporate earnings reports expected to continue for the rest of the week.
This time, gainers also overwhelmed losers at a similar ratio of 120 to 74, with 46 issues unchanged.
Notable in the market’s rebound, speculative issue PXP Energy Corp. (PXP), which is still reportedly keen on drilling in the disputed West Philippine Sea, surged to P14.18, up 39 percent.
In the first three days of week 22
This development should make St. Michael very happy. PXP is one of his only two stock positions in his investment portfolio. An agreement with China for a joint oil exploration activity in September is expected to be forged anytime soon.
This news should help maintain the price uptick of PXP, which would definitely help improve St. Michael’s standings in the contest.
By the way, there was a little error made in the transcription of Pixiu’s investment performance data for Week 21, ending July 27, 2018. Her correct return on investment (ROI) record as of said date was 113.46 percent. She has certainly widened her lead, again.
Fortune and good timing seem to be on her side. She was on a buying binge last Tuesday while she was on an all-out selling spree last Wednesday.
On Tuesday, she had buying orders for 20,000 shares of Vitarich Corporation (VITA) at P2.61 per share, 100,000 shares of Philippine Realty and Holdings Corporation (RLT) at 0.52 apiece and 10,000 shares of PhilWeb Corporation (WEB) at the share price of P5.65.
On Wednesday, her trading orders were to sell the following: 6.0 million shares of Oriental Petroleum & Minerals Corporation (OPM) at P0.013, 10,000 shares of WEB at P5.75 per share, 4,000 shares of Alliance Global Group, Inc. (AGI) at P12.10 per share and 20,000 shares of VITA at P2.58 apiece.
As you will notice, her buying orders last Tuesday for VITA and WEB turned out to be successful that she turned around the following day, Wednesday, to sell them – reflective of her investing strategy of buying and selling within a short period of time of one day to several days.
Small Time Trader was all set to sell some of his stock positions in an apparent bid to take profits. As early as Friday afternoon, he already submitted selling orders for Monday, July 30. These were to sell 4,000 shares of First Gen Corporation (FGEN) at P15.44 apiece; 2,000 shares of Robinsons Land Corporation (RLC) at P19.78 per share and 1,700 shares of SM Prime Holdings, Inc. (SMPH) at P38.50 per share.
Small Time Trader was successful in selling FGEN and RLC with his SMPH shares “Not Done.” His “Asked” price for SMPH was too high for the day.
Play Hard was also in a selling mood that he submitted three “sell” orders for July 30 and four “sell” orders” for July 31.
For July 30, his selling orders per share for the following were: 750 shares of Ayala Land, Inc. (ALI) at P41.50; 2,000 shares of EEI Corporation (EEI) at P11.00; and 1,000 shares of SMPH at an identical selling price of P38.50 as that of Small Time Trader.
Having the same “Asked” price for SMPH like that of Small Time Trader, SMPH shares were “Not Done” along with his selling order for EEI.
For July 31, Play Hard had the following selling orders: 1,000 shares for SMPH at (the higher price) of P39.00 per share; 575 shares of Metropolitan Bank and Trust Company (MBT) at P80.80 per share; 300 shares of Jollibee Food Corporation (JFC) at P270.00 per share; and 3, 500 shares of EEI at P11.00 apiece.
While he said he was taking profits out of his stock positions, he actually had high selling prices that only two of his selling orders of seven actually turned good – these were for ALI and JFC only — making me suspect that he might not really be hellbent on taking profits but still hoping for a market rebound.
The outcome of these trading orders by Small Time Trader, Play Hard and Pixiu will be properly reported next Tuesday.
Bottom line
While the US Federal Reserve kept its benchmark interest rate unchanged in its latest policy meeting on Wednesday, the Bangko Sentral ng Pilipinas (BSP) might raise key interest rates anew on Thursday next week, August 9.
The International Monetary Fund (IMF) and Organization of Economic Cooperation Development (OECD) are encouraging the move, declaring this will better safeguard price stability and continued progress.
The OECD, most especially, call the raise in policy rates again as “appropriate” given the current inflationary environment of the country. Inflationary pressure in the country is said to be relatively higher among the Southeast Asian countries.
In this connection, I believe that if government will implement a new interest rate regimen, our local market may again hobble at the 7,400 to 7,300 level. This may be aggravated by the market volatilities brought about by external factors like the developing trade war between the US and China.
(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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