Mixed bag
INVESTORS went into profit-taking mode last Friday, pulling down the market to 7,321.30, which was a day’s loss of 35.98 points or 0.49 percent.
The sell-off, however, was not enough to erase the market’s accumulated gains for the period. Thus, the market still ended with a net weekly gain of 74.10 points or 1.02 percent.
The sell-off, nonetheless, foiled the market’s upward attempt to climb higher.
Foreign investors’ trading activities appeared to have essentially hindered the market’s further advance—they sold more than bought last week.
On Monday, foreign investors’ transaction was 52.47 percent of total market. They were net buyers at the time the market ended with a daily gain of 44.23 points or 0.61 percent.
On Tuesday, however, foreign investors reversed the direction of their transactions as they turned net sellers. Despite the sudden change of trading direction, the market still ended with a day’s gain of 15.13 points or 0.21 percent.
Foreign investors were still selling on Wednesday. Their percentage of participation to total market transactions also increased to 53.64 percent. Surprisingly, the market managed to end higher at 7,341.00, a day’s gain of 34.44 points or 0.47 percent.
The market again advanced on Thursday, ending at 7,357.28 or a day’s gain of 16.28 points 0.22 percent, even as foreign investors continued with their selling mode.
What may have made the market hold its footing and even advance in the face of foreign investors’ continued sell-off—with the percentage of their transactions to total market even going beyond 50 percent—is possibly because local investors were not only able to absorb foreign investors’ supplies but were even willing to buy at higher prices.
The foreign investors were clearly chasing local investors that the market settled lower at 7,321.30 on Friday. Their transactions chalked up 62.12 percent of the total market.
Further analysis
Sell-offs may be the trend for the time being. Our market prices compared to US and Europe continue to look on the high side. Our average benchmark price-earnings multiple (P/E ratio) still runs high at 20.61x, while our all-shares index average market price is also high at 18.68x.
Annual earnings reported recently by actively traded listed companies were mix that the market’s average price-earnings ratios may momentarily stay high. Corporate earnings also have more room to improve.
Listed company Pepsi Cola Products Philippines Inc. (PIP), for instance, reported an almost flat income for 2015. Steep increases in sugar prices badly affected the company’s bottom line but capital expenditures rolled out helped raise revenues for the period.
Newly listed Stores Specialists, Inc. (SSI) also reported a weak performance. Net income fell close to 19 percent in 2015. The sale of its interest in WellWorth early this year, however, contributed to prop up its present financial status.
Puregold Price Club, Inc. (PGOLD) presented a better performance picture for 2015. Its net income grew by 10 percent to P5 billion. JG Summit Holdings Inc. (JGS) also reported a more favorable performance for 2015, posting a 38.1 percent growth in net profit last year to P28.05 billion.
Likewise, Global Estate Resorts, Inc. (GERI) reported a 39-percent increase in its net income for 2015. GERI’s growth was spurred by its residential businesses, some of which were in Alabang West and Boracay Newcoast.
Listed company 2GO Group Inc. reported a 71-percent increase in net income before tax to P1.5 billion. With the company’s active role in the national elections, it is looking forward to a strong performance in 2016.
Alliance Global Group Inc. (AGI) net income grew 5.4 percent to P13.9 billion and the Lopez Holdings Corp. (LPZ) also reported good operating results for 2015, with net income increasing 65 percent to P6.19 billion. Even listed television broadcast company GMA Network Inc. reported that its net income doubled in 2015.
Bottom line spin
If you read the other financial reports published lately, you will find most of them were reporting interesting better-than-bad operating results.
With improving global economic trends, the financial performance of local companies is anticipated to step up. This is regardless of who will be the next president in the country, as articulated by Jaime Augusto Zobel de Ayala, the chair of listed market leader Ayala Corp. (AC).
Based on latest reports, the China economy is also seen recovering from its so-called “flu.” Its foreseen hard landing may actually not happen anymore.
As the gains to prop up the economies of the US, Japan and the Eurozone countries are taking traction, the advance of equity markets like ours may be tempered for now.
(The writer is a licensed stockbroker of Eagle Equities, Inc. You may reach the Market Rider at [email protected], [email protected] or at www.kapitaltek.com)
