PH market: Into the first week of 2013

Trading resumed last Jan. 2, and like the qualities of the “Water Snake”—the year as designated in the Chinese calendar—the market started cautiously and then picked up, turning into an increasingly active trading day.

The benchmark Philippine Stock Exchange index, or PSEi, advanced 48.26 points, or 0.83 percent, at 5,860.99 on a total value turnover of P4.35 billion and total volume of transaction equivalent to 2.24 billion shares, establishing another record high for the market—the first for the year.

To a large degree, the market’s performance was attributed to the reaction registered by financial markets worldwide over the controversial US “fiscal cliff” problem that received last minute remedial measure from the US Congress. The act supposedly put to a “stop hundreds of billions of dollars in automatic tax increases (in 2013) and spending cuts that risked plunging the world’s biggest economy into recession.”

Trading momentum extended the following day, Thursday, with another lurching advance equivalent to 73.06 points, or 1.25 percent, at 5,934.05—again, a new all-time record.

Curiously, the market’s overall advance for the day was precipitated by the increase of total value turnover to almost double that of the previous day at P7.53 billion on a total volume of transaction equivalent to 2.34 billion shares, just a shade over that of the previous day of 2.24 billion shares. It can only be explained by the fact the market apparently shifted its trading focus into big-ticket or first-line stocks.

Market bears on Wall Street, in the meantime, were not content with the remedial measure devised by the US Congress to avert the “fiscal cliff” that their sentiments weighed in on the second day of trading on Jan. 3. The Dow Jones Industrial Average (DJIA) fell 21.19 points, closing at 13,391.36. The previous day’s trading close was 13,412.55.

Unaffected, our market on Friday proceeded to establish another record high. It advanced further with a net gain of 37.40 points, or 0.63 percent, at 5,971.45.

This happened as total value turnover amounted to what seemed to be the market’s regular trading transaction level of P7.59 billion.

Different story

Market results have a different story to tell, though, when you look at the total volume of transaction of the day. Total volume dropped significantly below the 2.24 to 2.34 billion shares volume of the past two trading days. It fell 30 percent lower at 1.62 billion shares.

Taking a closer look at the transaction results, it appears that as the market continued to chase their usual stock favorites in the property, industrial, services and holding firm sectors, trading interest also heightened in the financial sector. Value turnover in the subsector doubled for the day.

You may observe that stock transactions revolved around companies with businesses programmed by the National Economic Development Authority (Neda) to play substantial roles in the economy’s growth.

Said observation will also lead you to understand why transactions in the mining and oil sector have been low in the first three trading days of the market. As pointed out in my last column, Neda is clearly not relying on the mining industry to play a significant role in the economy’s growth program.

On second thought, like I also said the last time, a disconnection between economic variables and stock market performance oftentimes happen. This is the reason why, even when a certain sector of the economy is hard put, some companies in that sector come out with sterling performance results.

So, even if the mining industry is not obviously included as a major factor in Neda’s economic development program, this will not deter some mining issues to outperform during the year.

If you have been following the news, you don’t even have to sharpen your pencils to identify which of the companies will make it big next year.

Year of the Water Snake

Chinese legends say that the snake is a dragon that fell from the sky. That is why the snake is also called the little dragon.

But unlike the dragon, the snake does not have any limbs or wings. It uses internal energy—through its abdominal muscles—to move. This is why legend further claims that the year of the snake is considered a lot different and peculiar in many ways in influencing lives and events than any of the other animals in the Chinese zodiac.

According to the Chinese lunar calendar, the year of the snake begins on Feb. 10 and ends on Jan. 30, 2014.

Following the 12-animal year and five-element year cycle mechanism of the Chinese lunar calendar, the last year of the water snake was in 1953. Considered water snake babies then were those born “between Feb. 14, 1953 and Feb. 2, 1954.”

The snake is also the sixth of the 12 animals that compose the Chinese zodiac. As chronicled, it was the sixth animal to arrive to bid farewell to Buddha before his departure to heaven.

What are we to expect in the year of the snake? According to one prediction, “it’s going to be slow to many.” But like the snake, according to another prediction, “the year will be tricky but exciting to some.”

As pictured, the year will move forward in the way the snake moves. When its body undulates, it’s not easy to tell which direction the snake is going to take. “It will seem to go in one direction, and then, very unexpectedly, it will veer in completely another direction.”

For this, it is said that 2013 may be difficult to plan for. To overcome this, one must have the ability to decide fast or quickly react like the snake when confronted with a sudden change in situation. As said, “quick maneuvers are going to be needed in order to overcome unexpected obstacles.”

Not having such natural ability, one is admonished to make use of tools or gadgets to reinforce one’s faculties.

As foretold, “delusion and deception in the mind are common in the year of the water snake.” Thus, for this year, it is advised that “it is best to work with others,” following the dictum that two minds working together are better than one.

On a personal note, it is advised that you should “be thrifty, and conscientiously save money. This should be a top concern.” The year of the snake can lead you to spend money more quickly than earn them.

Bottom-line spin

Like our market, Wall Street’s main indices closed higher last Friday. S&P 500’s closing index was described to be “its best level since 2007” on reports that the US economy is gaining and showing clear signs of recovery from recession with the latest employment data as a preponderant supporting proof. The DJIA closed 43.85 points, or 0.33 percent, higher at 13,345.21; the Nasdaq was up 1.09 points, or 0.04 percent; and the S&P 500 rose 7.10 points, or 0.49 percent, to 1,466.47.

I still feel that our market and that of Wall Street are similarly situated. They are not yet on sure footing despite their early gains last week. Both look still soft and indeterminate. Like the snake’s gait, they could head up one moment and head down the next, with their directions still far from clear. In this connection, my trading advice is to have alternatives, be it with your stock picks or trading game for the period. Most importantly, be quick to react.

(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.)