Dangerous Chinese ghost month
The observance of the Chinese “ghost month”—which usually starts on the 14th or 15th day of the seventh lunar month—or August in our common calendar—began last July 31, Sunday.
According to traditional belief, the gate of the “Lower Realm” or hell is open during this period and spirits of the dead are free to wander the earth “for 29 days.”
This makes August “the most inauspicious time of the year” to undertake important activities such as “weddings, engagements, opening new businesses or closing business deals, starting new construction or renovations and other major actions and decisions.”
Thus, stock trading activities usually turn dull and uneventful at this time. Stock prices move lower or, at best, sideways.
This was how stock prices behaved during the Chinese ghost month last year.
This is why I didn’t even bother to write about it.
This time, though, the Chinese ghost month looks promising. Out-of-the-ordinary stock plays, which began to emerge just when the ghost month started, appear different and strangely interesting.
Strange stock plays
At the close of trading last Friday, the market recorded its highest value turnover transaction ever.
Some P35.351 billion changed hands that day, about P29 billion of which was accounted for by the special block sale transaction involving some 300 million shares of Manila Electric Co.
Contrary to the usual market reaction, that special block sale transaction discouraged a price rally of sorts. The price differential between MER’s market and block sale price concerned investors in the hunt for play of value in MER shares.
At the regular transaction board that day, shares of MER reached a high of P270 per share and a low of P260 before closing at P265 each.
Considering the sentiments in the current period, it may not be long before MER shares succumb to the influence of market bears in the coming days within the ghost month.
Another stock play that heralded the strong arrival of the Chinese ghost month was East Asia Power Resources Corp. (PWR). It was a moribund company trading at P0.39 per share for the last two years before its shares shot up after July 11.
Surprising run-up
Its takeover by real estate Century Properties Inc. (CPI) caused one of the most surprising price run-ups of a securities issue in the history of the bourse.
The surge more than eclipsed the “controversial” price rally (depending on what side you were in) of then BW Resources Corp. (BW).
Bought lock, stock and barrel for about P0.04 per share, the share price of PWR went up to as high as P5.66 following speculations that it would be taken over by CPI.
PWR is now in a precarious price play as its shares hit the low of P1.90 and closed, again, at P2.07 apiece last Friday.
Next is the strange—and certainly dangerous—stock play of Zeus Holdings Inc. (ZHI). Trading of its shares also started to heat up at the start of the Chinese ghost month.
It was incorporated on Dec. 31, 1981, as JR Garments Inc., a garment holding company. Its name was changed to Zeus Holdings Inc. along with its primary purpose on Sept. 9, 1996.
Speculations
Felipe Yap of Lepanto Consolidated Mining Co. (LC) became the company chair in November 1998 and has stayed there since.
“F. Yap Securities Inc. in trust for various clients” in June 2007 got absolute control of ZHI. But to this date, Zamcore Realty Corp. appears as the largest stockholder of record with a 34-percent equity interest.
At present, ZHI is not fully operational nor does it have any interest in any company. It is said to be evaluating business opportunities to revitalize its operations.
In this connection, there are speculations that ZHI may become a vehicle for LC’s partner, Gold Fields Ltd. of Canada, for its option to acquire 60 percent of the undeveloped gold-copper Far South-East (FSE) deposit in the Philippines.
Gold Fields has the right to exercise the option till March next year. It will cost $340 million, of which Gold Fields has already made one down payment of $44 million with another down payment of $66 million scheduled to be paid in September.
Gold Fields said during the May 11, 2011, Bank of America Merrill Lynch Global Metals & Mining Conference in Barcelona that FSE “represents one of the largest and the highest-grade copper-gold projects that exists on the planet.”
With these “forward looking statements” about FSE and Gold Fields’ option, the share price of ZHI also started to strangely rise at about the same time when PWR started to surge.
In just 16 days from the time it started to sizzle at P0.21 per share on July 11, ZHI’s market price has dangerously gone up by about 500 percent to P1.24 last Friday.
Bottom-line spin
These exciting and interesting stock plays in the mining and property sectors, however, must be treated with caution and care during this Chinese ghost month, for it is still a dangerous and strange time to undertake major trading activities.
It is recommended, therefore, that your hunt for rewarding stock plays during this Chinese ghost month be based on fundamentals. As is said, you’ll never go wrong if you will “only settle for the best.”
(The writer is a licensed stockbroker of Eagle Equities Inc. You may reach the Market Rider at [email protected] or directly at www.kapitaltek.com.)
