Good but not good enough
The Chinese “Ghost month” was said to have ended last Wednesday, Aug. 27. Yet, the “Ghost of August” seemed to have not left and continued to hound the market when the trading month of August ended last Friday.
To recall, the market was already on a roll since the beginning of the week. By Wednesday, it was so poised to challenge the next market objective of 7,200. The best it did, however, was to hit the session’s high of 7,176.23—the highest for the year.
Transactions from foreign investors helped propel the market higher as they were net buyers all week. Monday was a holiday in observance of National Heroes’ Day, but their participation to total market business activity in the remaining four trading days was 63.71 percent on Tuesday, 54.36 percent on Wednesday, 58.06 percent on Thursday, and 70.01 percent on Friday.
Block sales also helped push the market higher. Among others, the push came from the block sales on stock favorites like Philippine Long Distance and Telephone Co. (TEL), Ayala Land Inc. (ALI), Universal Robina Corp. (URC), GT Capital Holdings Inc. (GTCAP), BDO Unibank Inc. (BDO), SM Investments Corp. (SM), and Robinsons Retail Holdings Inc. (RRHI). Total block sales for the week amounted to P2.71 billion with a total volume of 7.13 billion shares.
On Thursday, however, the market started to weaken. Opening almost identically to the previous day’s close at 7,160.46, the market managed to reach only a high of 7,165.88. It slid to a low of 7,096.16 and close by the end of trading at 7,100.70, down 59.76 points or 0.83 percent. Total value turnover for the day amounted to P10.43 billion on market volume of 1.37 billion shares.
The downtrend continued on Friday with the market again sustaining a daily loss of 49.81 points or 0.70 percent: The market opened slightly higher at 7,107.89, proceeded to hit the high of 7,120.61, fall at the low of 7,027.41 and—by the end of trading—close at 7,050.89.
Overall market business activity this time, however, was notably beyond the ordinary. Total volume was 1.92 billion shares and total value turnover was P32.55 billion.
Almost half of total market transactions for the day were from trades on TEL, mostly accounted for by foreign investors. For the day, total foreign buying amounted to P25.9 billion and foreign selling, P19.68 billion.
GDP news
Two weeks ago, I was told the National Economic and Development Authority or Neda would be announcing the country’s gross domestic product (GDP) growth results for the second quarter within a week. My source was right. And so was the news on how much would it be.
I was told it would be somewhere around 6.5 percent, higher than the 5.3-percent growth posted during the first quarter. As it turned out, the economy grew 6.4 percent. This made the Philippines “the second fastest growing economy for the region (after China), tied with Malaysia’s performance and topping other Asean countries like Indonesia, which has 5.1 percent, and Thailand with 0.3 percent.”
Growth mainly came from the industry sector at 7.8 percent as well as from the services sectors at 6 percent. Growth in the industry sector was attributed to the manufacturing sector, which accelerated by as much as 10.8 percent.
Neda feels optimistic the country could yet pull another good run for its “growth rate target of 6.5 to 7.5 percent.”
But with comments on “the government’s inability to spend its budget due to bureaucratic bottlenecks that slow down the implementation of various projects,” the country’s GDP growth rate for 2014 is seen to go down to 5.9 percent, far below the recorded 7.2-percent growth rate of 2013.
Bottom line spin
According to the website I’ve consulted, the “Ghost month” started last Aug. 4 and will end on Sept. 4. If this is more accurate than the Aug. 27 estimate, the market’s prospects may yet have to be seen in the next few days.
Speaking of changes in market prospects, this can be enhanced by the planned new composition of the benchmark Philippine Stock Exchange index soon. In part, Philex Mining Corp. will be taken out of the list and will be replaced by tycoon Andrew Tan’s listed company, Emperador Inc. Also, the bourse is set to make changes in the composition of sector indices.
The financials index will have two additional members—Bright Kindle Resources and Investments Inc. and Sun Life Financial Inc. The holdings firm will be reduced to 14 members with the removal of Abacore Capital Holdings Inc., Minerales Industiras Corp. and Solid Group Inc. The property sector, on the other hand, will also have two new members with the removal of two in the current list.
(The writer is a licensed stockbroker of Eagle Equities, Inc.. You may reach the Market Rider at [email protected] , [email protected] or atwww.kapitaltek.com)
