Funny, the market is always known for being fickle and unpredictable. Yet, when it does, it always surprises us. At times, too, it’s irrational: There are times when good news is not good at all, as bad news sometimes becomes good.
The performance of the Dow Jones industrial average and the Standard & Poor’s 500 or S&P 500 behaved just like what the market could be last Friday: As reported, “after the (US) government reported an unexpected slowdown in consumer spending in April,” both closed with record highs.
The S&P 500 climbed to an all-time high of 1,923.57 to end the month of May, “disregarding the report that the US economy contracted during the first quarter, its first time in three years.” The Dow Jones industrial average or Dow closed last Friday to end the month with another record high at 16,717.17.
The Nasdaq also ended up 3.1 percent for the month of May, even though the composite index actually ended down 5.33 points or 0.1 percent to 4,242.62 at closing time last Friday. In addition, as the S&P 500 ended up 2.1 percent and the Dow 0.8 percent as of the end of May, both also showed four consecutive monthly gains.
Riding high, too, are the equity markets worldwide. Like the US market, they were reported to have also risen in the last four months. It was reported that “The MSCI All-Country World Index jumped 1.8 percent and touched the highest level in more than six years.”
These gains largely came from the performance of emerging markets. As detailed, “the benchmark indexes in India, Russia, Hungary, and Argentina jumped at least 8 percent.”
This was not to be the case with the local market. When the main index closed last Friday at 6,647.65, it was down for the third consecutive week with a weekly loss of 163.68 points or 2.40 percent.
As it closed for the month of May, too, the market ended with a net loss of 60.26 points or 0.89 percent.
Sectoral performances
Like opening the hood of the car to see the cause of its trouble, it is said that by looking at the performances of the different sectors of the market can make you see what could be troubling or pulling the market down.
For the week ending May 9, market capitalization or market cap increased to P13.48 billion, up 1.49 percent. All sectors contributed to the increase. This was led by the property sector with 2.99 percent, followed by the financials sector with 1.45 percent, the industrials with 1.44 percent, the services sector with 1.28 percent and the holding firms sector with 1.13 percent.
Although the mining and oil sector registered the biggest gain with 3.49 percent, its impact to overall market value turnover and ultimate performance was not that substantial.
The following week, market cap declined to P13.35 billion or down 0.99 percent. This was caused by losses incurred by all sectors led by services sector with 1.61 percent, followed by the financials sector with 1.14 percent and holdings firm sector with 0.72 percent.
Saving the market from further valuation erosion was the industrials sector, which registered a gain of 1.07 percent.
Further erosion in market cap occurred. For the week ending May 23, market cap went down further to P13.26 billion or 0.63 percent. All sectors registered losses except for the holdings firms, which posted an increase of 0.04 percent.
The biggest loser was the property sector with 0.90 percent. Next was the industrials sector with 0.35 percent, followed by the financial and services sectors with 0.18 percent a piece.
As of last week, the decrease in market cap continued with losses in the various sectors increasing significantly.
The services sector led the losses with 2.67 percent, followed by the property sector with 2.43 percent, the financials sector with 2.19 percent, the industrials sector with 2.07 and the holding firm sector with 1.47 percent.
At this time, too, market cap declined to Php13.09 billion, down 1.29 percent from the previous week.
Bottom line spin
The All-Shares index also suffered a loss like the benchmark Philippine Stock Exchange index or PSEi as earlier mentioned. It ended with a slightly bigger loss of 71.39 points or 1.75 percent at the end of the month of May as it closed at 3,997.57.
Accounting for the loss were the services sector with an overall decline of 3.16 percent, the financials sector with 2.04 percent, the holdings firm sector with 1.03 percent and the property sector with 0.46 percent. The mining and oil sector, which account for a very small percentage of total market business, also sustained a net loss of 3.95 percent for the month.
Only the industrials sector was saved from a decline. It ended the month of May with a net gain of 0.06 percent only because of what it did in the second week.
In summary, there is certainly a continuing decimation of market value in all sectors. This can only be attributed to the market’s tendency to sell than buy at the moment owing to its—relatively or comparatively—perceived overbought (overpriced) situation.
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