More advances to come
Investors’ mixed reactions on developments in the local political front still obviously continued to rule over the market’s movements last week. Sentiments were especially swayed—positively or negatively—by planned radical policies in government disclosed during the week by President-elect Rodrigo “Digong” Duterte.
The market particularly rallied in the first three days of the week amid optimism on promised changes in the sociopolitical landscape of the country by Duterte, who precisely won by a landslide based on a successful campaign platform to bring “real changes.” Notable among which was his vow to wipe out crime within six months when elected.
Of the “real changes” that was received positively and which also sent the market to a big run-up on Wednesday were about Duterte’s stern warning that he would be going after corrupt officials and inefficient government agencies. Duterte threatened to boot out corrupt government personnel and officials and would not hesitate to completely revamp underperforming agencies. On top of his list to undergo immediate review and “massive personnel movements” upon his assumption in office were the Philippine National Police (PNP), the Bureau of Customs (BOC), the Bureau of Internal Revenue (BIR) and the Land Transportation Office (LTO).
On Thursday, however, the extreme of these “real changes” steered the market to retreat when news on possible extra-judicial killings reached the market within the day following the repeated calls by Duterte for security forces to kill criminals. Police shot dead eight drug suspects in three separate raids in Metro Manila and in Bulacan while gunmen on motorcycles also killed three petty criminals in Duterte’s hometown of Davao.
While the market opened higher on Friday at 7,393.87, trading proceeded cautiously that it slipped almost immediately by 19.91 points to 7,373.96 before regaining footing by midday. This served as the session’s low for the day.
The market clawed back upon resumption for the afternoon session, where it hit the session’s high of 7,430.93. The market, however, settled lower by 19.25 points at 7,411.68 when it closed for the day.
Foreign investors’ trading activities may seemed to have influenced the market’s movement this time. This happened as foreign investors took the lead for the day inspired by the rally on Wall Street following the latest report that showed strong data on the strength of the US economy and favorable local corporate results and expansion plans. Foreign investors ended as net buyers and controlled 56.44 percent of total market transactions.
Bottom line spin
For the week, the market was able to recover from the previous week’s fall with a net gain of 112.65 points or 1.54 percent. The rebound, however, was not enough to propel the market to its session’s high of 7,568.25 last May 17, or to its highest close of 7,534.84 last May 18.
It was the industrial and the mining and oil sectors that pulled down the market. It was the property sector that made a strong contribution to the market’s advance with its strong gain of 156.31 points or 5.13 percent. But it was the holding sector that made the biggest impact in the market’s advance with its high value turnover of P22.51 billion, with a net advance of 38.95 points or 0.53 percent.
Contributory to the holding sector’s gain is the announced investment plans of San Miguel Corp. (SMC) of about P60 billion. SMC plans to develop a 500-hectare property in Bataan, one project of which is the construction of a 600-megawatt coal-fired power plant in the Freeport Area of Bataan. Aside from the industrial estate and the power plant, SMC plans to expand its feed plant in Mariveles, Bataan. SMC is expected to be doubling the capacity of its B-Meg plant. The latest expansion plans will bolster SMC’s position as one of the country’s largest conglomerate with interests in food, beverage, infrastructure, packaging, oil refinery, beer and power.
The services sector also contributed to the market’s recovery. It closed at 1,463.12, with a weekly gain of 19.57 points or 1.36 percent.
Among the other concerns pointed out by Duterte as part of his policy to bolster development and growth in the country is the improvement of the telecommunications industry. Of highest concern is the speeding up of Internet service, which is one of the slowest in the world.
According to Internet metrics provider Ookala, the Philippines is in 176th spot out of 202 countries. It also shares the same Internet speed as that of Asia’s slowest, namely Afghanistan. Aside from slow speed, Internet service in the Philippines is also expensive. According to published studies, Internet service is about “US$18.19 per Mbps” while cost across the globe is about US$5.21 only.
Looking at these developments together with the market’s recent movements, it appears that the local political front, indeed, still continue to be a strong factor in the market’s outlook. Also, should the market maintain its daily average value turnover of P10.09 billion, expect more advances to continue.
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
