Cautious optimism
DEN SOMERA
Two major factors were blamed again for the market’s volatile, though, buoyant behavior last week. These were the continuing issues on local inflation and investors’ fears of what an all-out trade war between Beijing and Washington may cost markets including ours.
Inflation, or the movement of prices of basic goods and services, first rose to become a problem when it accelerated to 4.6 percent in May and set a new five-year record high when it climbed further to 5.2 percent in June and showed no signs of slowing down in July.
The passage and implementation of the first package of the Tax Reform for Acceleration and Inclusion (TRAIN) of the government comprehensive tax reform program (CTRP) was primarily blamed on the matter. This is now fast becoming a political issue that could very well undermine President Duterte’s popular support and the administration’s development programs for inflation was mainly driven by consumer items of the broad spectrum of the populace like seafood, fuel and lubricants, and bread and cereals.
Recent government pronouncements to address rising prices, likewise, provided the main incentive for the market to rebound.
The market’s particular “oversold situation” (a condition in technical analysis where the prices of stocks have fallen sharply below their regarded intrinsic value) also encouraged investors into bargain hunting that made the market to close with a weekly gain of 118.01 points or 1.53 percent for the Philippine Stock Exchange Index (PSEi) and the All Shares up with a weekly gain of 53.22 points or 1.14 percent.
All week, our market was also kept on edge by the impact of the increasingly heated trade row between the US and China. Local investors’ sentiments followed the general seesaw of trading results in other equity markets that will be more directly affected by an actual trade war between the two economies.
The ambivalent reaction of investors toward the said factors nonetheless helped fuel our market to bounce back at the end of last week to a threatening distance that may break the immediate resistance level of 7,800.
In the game
Not at her best week, Pixiu nevertheless maintained her number one position in the leaderboard for Week 22, covering the period July 30 to Aug. 3, 2018. She had a return on investment (ROI) of 112.20 percent, which was actually lower by 1.26 percent from her previous week’s performance.
What pulled her down was the poor performance of her stockholdings in Rockwell Land Corporation (ROCK) and Vitarich Corporation (VITA). The later was number 13 among the top 30 losers of the bourse while the former was number 22 in the same list.
Like always, however, she had the most trading orders for the period and below is the table detailing her trading activities. (See Table 1)
Despite his continued inactivity, HRB 2015 maintained his number two position in the contest. He had no transactions for the week and continued to hold only one stock, with 80 percent of his capital still in cash.
The weakness of his strategy, however, is starting to show. The value of his investment portfolio hasn’t actually improved unlike the more proactive stance of Pixiu and Play Hard. Below is an update of his performance standing for Week 22. (See Table 2)
With an identical number of trading orders for the week like the reigning champ Pixiu, Play Hard’s more active participation somehow paid off. His investment portfolio grew a little more by 0.74 percent from previous with an ROI of 99.82 percent. (See Table 3)
Climbing two notches higher in the leaderboard in Week 22 is St. Michael. His shareholdings in Philex Energy Corporation (PXP) went up by as much as 30.64 percent for the week and became number three in the list of the bourse’ top 30 gainers.
He was again without any trading transaction last week, but the on-going market speculation with PXP in connection with the planned joint venture drilling with China in West Philippine Sea made it possible for his investment portfolio to lift his investment performance to 97.39 percent ROI, up 6.52 percent from the week (the highest gain for the week by any of the active players). (See Table 4)
If you look closely, Dondee Prime was edged out by St. Michael by only 0.01 percent in investment performance, with still a record of 97.38 percent ROI.
Dondee Prime still has a sizeable bundle of cash left to bolster his investment returns. (See Table 5)
Small Time Trader was the third active player to have a trading transaction for the week. And despite the uptick in the prices of most of his stock picks, the weakness in the market price of property stock Filinvest Land, Inc. (FLI), his biggest stockholding, stunted his performance to only 96.99 percent to end up with a measly gain of 0.49 percent from the previous week.
Below is the update on the composition of his investment portfolio for Week 22. (See Table 6)
Dud67 remained at the bottom of the leaderboard for Week 22. The drop in the price of his NOW Corporation (NOW) shares, which lost its luster among market punters for the third telco game, pulled down his record to only 64.16 percent ROI. This was actually 0.63 percent less than his performance the week before.
MRC Allied, Inc. shares did well last week. It was number 15 among the top 30 gainers in the bourse. However, his exposure in the stock was only about half of the amount he invested in NOW. (See Table 6)
Bottom line
The Bangko Sentral ng Pilipinas (BSP) might raise key interest rates by 50 basis points on Thursday, August 9.
This is both “good” and “bad” news again for the market. This is deemed the appropriate rate to rein in inflation.
This move, on the other hand, could potentially siphon out some money and lessen the mount of trading transactions.
Overall, however, the move is expected to be “strong” enough to produce a “decisive result to tame inflation back to the target of two percent to four percent.”
At the other end, while “the risks of escalation remain high,” it’s found that the threats hurled by the two countries are but “negotiating tactics for a genuine solution to their trade problems.
These anticipated developments, however, are still to materialize. Until then, investors are expected to take the market with “cautious optimism.”
(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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