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Market Rider

Expect more market volatility


When the market settled at 6,242.26 at the end of trading last June 14, it has incurred a cumulative loss of 1,149.94 points. This made the market give back 74.69 percent of its total gains for the year.

This put the market at some bargain level. However, as we look closer at the trading results last week, while the market rallied on Monday and Tuesday, the market fell all the way until Friday.

Interestingly, the market ended with a weekly loss of 60.09 points or just 0.096 percent. This was a far cry from the 300-point average weekly losses the market suffered the previous three weeks.

Can there be anything positive that we can draw from the market’s performance last week?

Further observations

The only positive thing is the greatly reduced weekly loss. When the market closed for the month of May, it posted a weekly loss of 246.96 points or 3.4 percent.  This was the first big weekly loss the market suffered for the year.

Quite surprising, even if foreign buying amounted to P49.14 billion while foreign selling was only P42.32 billion, the market still fell as if to signify that the market had reached a turning point from its trend.

Moreover, it appeared that it was the locals who sold down the market, for the market fell even if foreign buying was up P7 billion more than they were selling.

In the first week of June, as the market continued to fall, it incurred another weekly loss equivalent to 321 points or 4.56 percent. The market, by this time, had incurred a cumulative loss of 567.96 points or 36.89 percent of the gains for the year. Foreign buying was less at P33.77 billion while foreign selling was bigger at P42.2 billion, indicating that it was the selling activities of foreign investors that drove the market lower.

In the second week of June, the market incurred another weekly loss of 459.69 points or 6.86 percent. It was the market’s biggest weekly loss in the last three years. Total cumulative market losses at this point amounted to 1,027 points or 66.75 percent of the total gains for 2013.

Foreign investors also seemed to continue to drive down the market that week as their buying transactions reached P30.1 billion while selling amounted to P32.46 billion.

The market’s total cumulative loss at the end of trading last Friday was 1,087.74 points or 70.66 percent of the total gains for the year. Foreign buying was again smaller at P21.39 billion while foreign selling was bigger at P24.73 billion.

Bottom line spin

With its lower rate of weekly loss, the market still looks far from its bottom or turning point.  It continues to be fragile and remains highly susceptible to developments overseas, particularly on Wall Street.

For instance, out of the market’s 20 most actively traded stocks last Friday, only four issues posted price gains. To think that their total value turnover accounted for about 75 percent of the total market transactions, it is most likely that the market nay continue to be weighed down by more price weakness.

The four issues that registered price gains were BDO Unibank Inc. (BDO), which rose P1 or 1.22 percent; Ayala Corp., (AC), which closed at P602 a share or a gain of P5.50 or 0.92 percent; Ayala Land Inc. (ALI), which rose P0.10 or 0.35 percent as it closed at Php29.00,  Metro Pacific Corp. (MPI), which gained P0.10 or 0.36 percent as it closed at P5.60 a share.

The 17 other issues in the list all posted losses for the day. The top 10 were: Philippine Long Distance and Telephone Corp. (TEL) with a price loss of P32 a share or 1.13 percent at P2,788; SM Investments Corp. (SM), price loss of P34.50 or 3.48 percent at P856; SM Prime Holdings (SMPH), price loss of P0.62 or 3.94 percent at P15.10; Metropolitan Bank and Trust Co. (MBT), price loss of P4 or 3.42 percent at P112; Universal Robina Corp. (URC), price loss of P1.60 or 1.42 percent at P111; Globe Telecom Inc. (GLO), price loss of P50 or 3.33 percent at P1,450; Alliance Global Group Inc. (AGI), price loss of P1.60 or 1.89 percent at P23, and Bank of the Philippine Islands (BPI), a loss of P0.10 or 0.11 percent at P91.

In summary, the market posted two days of gains (Monday and Tuesday), followed by three days of losses (Wednesday, Thursday and Friday).  The market’s trading gain on Monday amounted to 97.15 points or 1.56 percent while it made an additional trading gain of 179.36 points or 2.83 percent on Tuesday. The market’s combined gain in these two days amounted to 276.51 points.

On the other hand, the market posted a total loss of 336.6 points in three days; 5.57 points on Wednesday, 186.57 points on Thursday and 144.50 points on Friday.

Even if the market ended with a weekly loss of only 60.09 points or 0.96 percent, the trend of the market’s daily rate of losses has not gone down to show a significant rate of change.

(The writer is a licensed stockbroker of Eagle Equities, Inc..  You may reach the Market Rider at marketrider@inquirer.com.ph , densomera@msn.com or at www.kapitaltek.com)

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Tags: Business , column , den somera , Stock Market , volatility

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