Do enough, but only enough

The market made its 12th record close on Tuesday last week at 7,793.40. This was immediately broken the following day—for the 13th record close—as the benchmark Philippine Stock Exchange index (PSEi) advanced 10.05 points or 0.13 percent at 7,803.45.

On the occasion of the observance of the Chinese New Year, a trading holiday was declared on Thursday. When trading resumed on Friday, the market continued to climb higher with a net advance of 21.94 points or 0.67 percent, lifting the market to 7,825.39, its 14th record close.

The market’s climb for the week was generally driven by favorable local news. The economy was said to have strengthened further. This encouraged investors to commit themselves to the market, supported by fresh announcements on the positive stream of 2014 corporate earnings results. The Bangko Sentral ng Pilipinas (BSP), in particular, noted that consumer loans continued to grow. It said the numbers reported would sustain the country’s growth trajectory. This may, in turn, redound to more favorable corporate earnings.

In the meantime, foreign investors continued to be net buyers but participation in the market’s overall trading transactions for the week decreased to 45.16 percent. This was 11.16-percent lower than the preceding week’s record level of 56.86 percent. This also pulled down foreign investors’ year-to-date participation to 0.4 percent at 45.70 percent.

Other results

Last week, total value turnover amounted to P27.43 billion only on a total volume transaction of 12.2 billion shares. This was a big drop from the market’s weekly value turnover in the last three weeks, not to mention their having a lesser ratio of shares transaction volume. In particular, total value turnover for the week Jan. 26-30 was P58.01 billion while total volume was only 11.31 billion shares. This was followed by a total value turnover of P63.94 billion and a total volume of 10.45 billion shares on Feb. 2-6. On Feb. 9-13, total value turnover amounted to P56.26 billion while total volume was 11.45 billion shares. This drop in total value turnover but higher proportion of transaction volume last week was largely due to the market’s return to more regular trades. For the week, nonregular trade transactions only amounted to half a percent.

In the previous three weeks, non-regular market trades were equivalent to no less than 20 percent of total value turnover. Total transaction volume, on the other hand, ranged from a low of 14 to a high 20 percent. Block sales transactions make up the bulk of non-regular market trades. If you, therefore, watch them more closely, they can often lead you as to which stocks to pick or dispose off. Among other things, a stock’s block sales transaction volume and pricing can be indicative of its future performance.

This was why Universal Robina Corp. (URC) has been the in the market’s most active and top 30 gainers list for the longest time since it had a series of block sales transactions. This will also make you appreciate why GTCAP along with JFC, EDC and ALI continued to stay as market leaders alongside long-time stock leader TEL. This may also make you realize why MPI, though still one of the market’s most active stocks, showed some weakness last week.

Lastly, while the market on the whole ended with a net gain for the week, the financial and mining/oil sectors both actually failed to help out. Despite positive price advances of their composite stocks, three other sectors suffered a loss in total value turnover.

Once more, these subtle changes in the different sector’s price and turnover performances are indicative of what stocks the market are keeping or selling.

Bottom line spin

Despite the market’s displayed bullish play throughout the week, it failed to break 8,000, again. Outside factors simply seemed to dampen investors’ overall outlook. Positive local developments like the robust reports on corporate earnings and consumption results—together with the observance of the Chinese New Year—still failed to drive the market higher.

The market’s overall attitude was tempered by pending developments in Brussels in connection with the resolution of the Greek debt situation and future membership in the European Union. Investors’ outlook was further dampened by initial reports on the US-brokered ceasefire agreement between Ukraine and its Russian-back rebels. After our trading hours for the day ended, however, these two factors added pep to Wall Street’s trading performance on Friday.

The finance ministers of Greece and the European Union reached a deal to extend Greece’s financial rescue by four months. The agreement removed the immediate risk of Greece running out of money after Feb. 28, when its original bailout contract expires and “possibly being forced out of the single currency area.”

It’s not certain whether our local market will exactly behave like Wall Street with these new developments. As things still continue to be tenuous, our market may remain to “do enough, but only enough” as it did last week.

(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