The unfavorable, if not dangerous, ‘Ghost Month’

The end of July leads us to the month of August and into the so-called “Ghost Month” calendared this year to start on Aug. 14 and end on Sept. 12.

During the “Ghost Month,” according to  Chinese tradition, is “the time when the gate of hell will open to allow the ghosts and spirits to go back to the living world.”  It is a time for reconciling opposite worlds, which local investors consider an unfavorable, if not, a dangerous time for the stock market.

In this connection, the month of July ended last week on negative territory notwithstanding window dressing efforts.

If last week’s close for July is any indication of what the “Ghost Month” of August could be like, the answer is it could be weak and negative.

This will be due mainly to the present position of foreign investors as net sellers in the market.  Based on developments abroad especially in the United States, the selling trend among foreign investors might last up to the end of the third quarter.

Based on past experiences, the directions taken by foreign investors have turned out to be a determining factor in the twist and turns of the market, so to speak.

Since the market’s recent recoveries and advances have largely been from the punting activities of local players, it is expected that the advances will not last long.  Local players, in general, don’t hold investments for the long-term.  They are short-term investors, described in market parlance as the “weaker hands” that give way to sell-offs or market downturns.

When the Philippine Stock Exchange index (PSEi) closed at 7,550.00 last Friday, the market ended with a weekly loss of 115.52 points or 1.51 percent even if it was up in three out of five trading days of the week.

This happened because when the market posted losses on Monday and Tuesday, foreign investors were the big sellers.  They ended as net sellers and rendered total market losses swelling to 186.49 points or 2.45 percent.

When the market rebounded on Wednesday and Thursday, advances were limited to a total of 31.36 points or 0.42 percent. This is because foreign investors remained net sellers.

No doubt, the selling stance taken by foreign investors at the time tempered the market’s advances.

When the market finally ended with a bigger net gain of 39.61 points or 0.53 percent on Friday, foreign investors were notably at the opposite side of the trading equation.  They were net buyers, this time.

Other activities

Last Friday, too, the percentage of foreign investors’ market participation to total market transactions rose to a high of 60.45 percent.  This certainly contributed to the market’s higher close and bigger gain.

It’s quite difficult to ignore the various activities that are going on at the political front, now that developments are getting more and more engaging.

Interior and Local Government Secretary Manuel “Mar” Roxas II was endorsed by no other than PNoy last Friday as standard bearer of the ruling Liberal Party (LP) for the 2016 presidential election.

Sen. Grace Poe bided him best wishes, signaling an end to a possible Mar-Grace tandem, much less the highly wild talk of a Poe presidential candidacy under the Liberal Party.

Some LP stalwarts claimed that Poe’s friend, Sen. Francis “Chiz” Escudero, was the spoiler in the aspired arrangement.  He was left out of the equation, which was a concern of the former considering their expressed support and loyalty to each other.

Interestingly, the development delighted Vice President Jejomar “Jojo” Binay.  He claimed this would only “highlight his strength as a leader” when compared to Roxas “in terms of experience, ability, and love of country particularly on adherence to people’s welfare.”  He also pointed out that he had made Roxas “eat his dust” in the last election.

While former President and current Manila Mayor Joseph Estrada said he might give his support to Roxas, being once a member of his Cabinet when he was president, Grace Poe is her goddaughter and Jojo Binay is a kumpadre (sponsor to one of Binay’s children).  Between these personalities, he could pull a surprise.

Of late, it is said that funding support from various interest groups has been slowly fading for UNA since the Senate hearing on the alleged corruption charges against Binay.  Funding seemed to have swelled for a Grace Poe candidacy to the presidency since she continues to top presidential surveys.

The coming days should give us more signs as to where this contest for the presidency will lead us. As of now, Binay claims he is dead sure of running and winning the presidency; Grace Poe is in a possible make-or-break dash for the presidency; PNoy (and followers) still hell-bent on pushing a two-candidates-only presidential contest.

Bottom line spin

Because of this stance of foreign investors as net sellers than net buyers, all sectors closed lower during the week, like they might be in the “Ghost Month”: financial, down 1.82 percent; industrials, down 0.59 percent; holding firms, down 1.27 percent; property, down 1.95 percent; services, down 1.31 percent; mining and oil sector, down 1.71 percent.  This sent the All Shares index down 1.13 percent.

In conclusion, keep in mind that the market’s overall long-term outlook remains good. Thus, the “unfavorable, if not dangerous,” “Ghost Month,” should be taken as an opportunity to buy.

(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