Market trend cut short by typhoon

Tropical storm “Mario,” internationally known as Fung-wong, lashed at Metro Manila last Friday with heavy rains that paralyzed the capital region.

Floods forced many private establishments, including banks, to close for the day. Government employees, not involved in rescue operations and medical emergencies, were also made to go home.

Trading at the bourse was suspended and classes on all levels were cancelled.

Tropical storm Mario’s winds were relatively light. It had maximum speed of only 65 kilometers (40 miles) an hour. However, the heavy rains dumped some 268 millimeters (10.5 inches) of water in over 24 hours, according to reports.

In an assessment report of the Philippine Atmospheric, Geophysical and Astronomical Services Administration or Pagasa, the overnight downpour represented 76 percent of the average rainfall for an entire month.

Compared by Pagasa to previous typhoons with most destructive effects, the volume dumped by Mario represented more than half the amount of the record-rainfall of Typhoon “Ondoy” (international codename Ketsana) which caused massive flooding in the capital region in 2009. The rainfall of Ondoy is described as “the worst in 40 years.”

In the Bicol region, Typhoon Mario caused heightened alert because of the continuing eruptions of Mayon, the 2,640-meter (8,712-foot) most active volcano in the country located in Albay province. The heavy monsoon rain with Typhoon Mario could cause deadly volcanic mudflows.

An average of 20 typhoons hit the Philippines each year. Last year’s Typhoon “Yolanda” (international codename Haiyan) is the “strongest ever to hit land.” It left about 7,300 people dead or missing.

Current trend

The market was apparently trending upwards again last week but Typhoon Mario cut it short.

The market seemed to have hit bottom last Monday. It closed at 7,161.27 with a loss for the day of 40.61 points or 0.56 percent on a volume of 1.03 billion shares and value turnover of P6.19 billion.

On Tuesday, the market closed higher at 7,180.34 with a gain of 19.07 points or 0.27 percent.

The market’s advance was precipitated by trading interests on smaller cap stocks as total value turnover was only P6.71 billion—almost equal to the total transaction in the previous day of Php6.19 billion—while total volume for the day doubled to 2.24 billion shares.

Also, the market’s advance was obviously powered by local investors’ punting activities as foreign investors ended as net sellers.

This was quite understandable. Investors on Wall Street were edgy at the time because of the pending meeting of the Federal Reserve on Wednesday (US time) to decide whether to raise interest rates.

Again, the market climbed on Wednesday. Total value turnover rose 20.86 percent to P8.11 billion while total volume rose 45.09 percent to 3.25 billion shares.

At this time, the market broke through the 7,200-mark—when it opened at 7,182.84, it proceeded to hit the session’s high of 7,250.10.

By the end of the trading session, the market drifted lower but managed to stay above the 7,200 as it closed at 7,231.84 with a gain of 51.50 points or 0.72 percent.

On Thursday, as the market was now aware of the decision of the Federal Reserve to hold interest rates at where they are, trading continued to trend higher. Foreign investors reversed their position. They turned net buyers and accounted for about 50 percent of the day’s overall business transactions.

At this time, trading plays shifted to big cap stocks. Total value turnover amounted to P7.99 billion and total volume to 1.74 billion shares.

Bottom line spin

Notice the market’s advances were increasing last week. After hitting bottom on Monday, the market made a gain of 19.07 points or 0.07 percent on Tuesday. This was followed by another advance of 51.50 points or 0.72 percent on Wednesday, and another by 55.45 points or 0.77 percent on Thursday for a net advance of 126.02 points in three days.

At the trading close of 7,287.29 on Thursday, the market was just 104.91 points away the record close of 7,392.2 and only about 116.36 points away from the all-time session high of 7,403.65, the market all established on May 15, 2013.

At the trading close of 7, 287.29, the market has gone up by 23.73 percent year-to-date (YTD) or since the beginning of the year.

Looking at the trading results around the region and on Wall Street, the market may have possibly advanced further last Friday.

Inexplicably, like how the French poet and philosopher Honore De Balzac said about love when he said “love has its own instinct, finding the way to the heart, as the feeblest insect finds the way to its flower, with all a will which nothing can dismay nor turn aside,” the market may not be able to break out soon even if it is just a few steps away from its record highs.

It may not be allowed to do just that without further difficulty and delay.

(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)