Starting leads for 2016

The Philippine Stock Exchange benchmark index or PSEi fell on the last two trading days of 2015, on Dec. 28 and 29.

When it closed on Dec. 23, the PSEi was excitingly up 135 points or 1.97 percent at 7,002.42. This close was above the year’s psychological breakout level at 7,000, that it seemingly gave the impression of an imminent market run-up all the way toward the end of the year.

But when trading resumed on Dec. 28, the unexpected happened. The market opened lower by 122.11 points or 1.74 percent at 6,880.31.

Foreign investors saw it as an opportunity to buy back into the market that they ended as net buyers for the day. The percentage of their participation to total market transactions also rose to 55.34 percent, far beyond their year-to-date normal of 48 percent.

Despite the net buying mode of foreign investors and their bigger share in the market’s overall transactions, they proved to be not enough to stem the market’s fall by the end of the day. The market ended with a loss of 18.81 points or 0.27 percent from the previous trading session’s close of 7,002.42.

Obviously, foreign investors did not chase the stocks up as they normally do. They, instead, bought the stocks on their way down following the selling drift of the market.

On Dec. 29, the market fell by another 31.53 points or 0.45 percent to 6,908.28, after opening at 6,975.69 and reaching the session’s high of 6,991.01.

As foreign investors were net buyers for the day, it was their buying transactions that may have made the market to move up initially. But, as trading went on during the day, the market succumbed to a general selloff. And while foreign investors still ended up as net buyers, the percentage of their transactions to total market activity was way down to 31.78 percent only.

Observations

For the first time after about seven years of continued gains, the market ended in a loss in 2015. It was down 278.49 points or 3.85 percent from its beginning level of 7,230.57. Likewise, the broad market All Shares index ended in the negative with a loss of 274.14 points or 6.43 percent.

Only two subsectors of the market survived the year with positive gains. These were the holding firms and property sectors. The holding firms sector was up 301.32 points or 4.78 percent and the property sector was up 105.35 points or 3.75 percent.

Worst hit was the mining and oil sector with a loss of 34.1 percent, followed by the services sector with a loss of 28.03 percent. The financial sector was down 8.58 percent, and the industrial sector, 7.94 percent.

Holding firms and the property sector are obviously the markets to watch for in 2016 considering their positive performance in such a difficult and tough year as 2015. The financial and industrial sectors may have a good chance to bounce back in 2016 considering recent developments like the US Fed’s increase in interest rates and coming local presidential elections.

The services sector is something of a study. It has lost so much that if it will rebound, it will have an equally big gain. But as we know, a stock or market that has dropped by so much does not necessarily have the ability to bounce back. We need more leads to work on.

The future of the mining sector will again depend on the next officials. For oils, the consensus is that the sector will drop some more.

On Wall Street, 2015 wasn’t a happy year either for US investors. The broad Standard & Poor’s 500 (S&P 500) stock index, which was expected to finish strongly in 2015, ended down 0.7 percent at 2,043.94. Likewise, the Dow Jones Industrial Average (DJIA) index ended down by 396.04 points or 2.22 percent at 17,425.03.

It was a different story for the Nasdaq Composite (Nasdaq). It ended 2015 up 271.36 points or 5.73 percent when it closed at 5,007.41.

Market experts and strategists find the strong performance of Nasdaq as an indication that tech stocks could become “the stocks” to play.

In particular, this will be on companies with businesses directly or indirectly related to the Internet.

Here are some interesting information reported about the subject: “There were 2.4 billion and 8.7 billion devices online in 2014; all of those devices and the servers connecting them require 50 million horsepower of electricity; 60 seconds, 72 hours of video are uploaded to YouTube; one in five couples getting married in the US today met online.”

Google’s report was also quoted that “the Internet today contains about 8 billion terabytes of data—or about 18 million times the amount of information stored at the world’s largest library, the library of Congress (US); this information is spread across more than 630 million web pages; most of which are all accessible via 4G quality connection, even at the top of Mt. Everest, the highest point on earth.”

There is no doubt that more business and investment opportunities will be created beyond our present imagination.

Bottom line spin

I am still getting myself familiar with the various investment opportunities available to companies with businesses directly or indirectly related to the Internet.

One thing’s sure, the coming presidential elections will have a great impact on the investment landscape of the Philippines.

Of the candidates running for the position, I don’t see a radical difference in their purported development programs. The elections will possibly, again, boil down to personalities and hold in the grassroots level.

Vice President Jejomar Binay has showed mastery on said matters. He was again reported to be the man to beat in the presidential race, according to the Pulse Asia Survey released on Dec. 22. His approval rating jumped to 33 percent, “14 percentage point higher from the last survey (of) September.”

Sen. Grace Poe, the leading contender in the previous survey, dropped to second place. She now shares the spot with Davao City Mayor Rodrigo Duterte, “who climbed 7 percentage points from the previous survey.”

In the survey, Poe only garnered 21 percent against Duterte’s 23 percent. Considering the margin of error adopted in the survey, they are considered statistically tied.

On New Year’s Eve, some wild talk reached me. It purports that Vice President Binay is not taking any chances of losing—at least, some control of—the presidency. Considering the last survey results, Binay is said to believe that if there is anybody who can beat him, it will be Duterte. So, he is now said to be bankrolling Duterte’s campaign.

(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)