Holy trading

Last week’s three-day trading results had the typical drift that often defined the market’s performance during the observance of Lent: Trading was thin but stock prices held on to their highs.

The benchmark index again closed the week with another high for the year at 7,360.05, a net gain of 53.31 points or 0.73 percent only.

Weekly market value turnover, on the other hand, only amounted to P22.86 billion.  This was equivalent to a daily average of P7.38 billion, which was 12.87 percent lower than the market’s daily average value turnover of P8.47 billion the week before.

The seasonal character of the market is supposedly due to active punters being out on vacation owing to the long weekend that coincided with the observance of the Holy Week.

Interestingly, foreign investors’ transactions continued to climb higher last week.  It went up to an average of 51.64 percent of total market.  The only problem was that, when their transactions spiked to as high as 55.43 percent last Tuesday, they became net sellers for the day ending with the market closing at a net loss of 34.38 points or 0.47 percent.

Thus, the market settled for the week at 7,342.03, a net gain of 34.38 points or 0.47 percent only.

Sectoral review

Of the six sectors of the market, only four made some gains while two other sectors ended with losses last week.

The industrial index made the biggest gain of 1.59 percent when it settled at 11,730.24. The last four weeks saw it rise by 5.76 percent, while its year-to-date gain was 6.34 percent.  Its average price-earnings (PE) ratio now stood at 20.34x,  a shade away from the benchmark Philippine Stock Exchange index (PSEi) of 20.65x.

Next was the holding firms sector, which garnered a net advance of 1.02 percent when it closed at 7,210.13. It gained 12.18 percent in the last four weeks and 9.22 percent year-to-date. These made the holding firms sector become the number one sector in the market despite having the highest PE ratio of 22.57x.

Coming in third with a net gain of 0.9 percent was the financial sector.  This also made the four-week and year-to-date net gain of the financial sector to go up by 9.27 percent and 5.60 percent, respectively.  Average PE ratio, however, was still  low at 14.93x.

Last among the gainers was the property sector with a net gain of 0.39 percent.  Be that as it may, the property sector still ranked second among the sectors with the highest net gain in the last four weeks at 11.33 percent.

Were it not for its strong performance in the last four weeks, the property sector could have still been in negative territory.  At its closing index of 2,998.10 last week, the property sector only has a year-to-date net gain of 2.83 percent.

Meanwhile, the services sector fell lower last week at 1,556.30, a net loss of 0.8 percent.  This brought down its already small net gain in the last four weeks to 1.34 percent.  This also brought down its year-to-date net gain to 1.70 percent.  The sector’s average PE ratio of 19.57x seemed to continue to weigh down on its performance.

As usual, the mining and oil sector was the biggest loser for the week with a net loss of 2.16 percent.  As a result, this slashed the sector’s net gain in four weeks to only 5.15 percent and 7.12 percent year-to-date.

Bottom line spin

In the last four years, Lent came in as early as March for the years 2013, 2015 and 2016 and as late as April for 2014. During these years, the market all climbed up after Holy Week.  Notice, however, that there were differences in the advances.

In 2013, the market’s climb after Holy Week was very strong.  The climb, however, only lasted less than two months.  The market peaked immediately by the middle of May, but it was largely downhill from there until the end of the year.

To be exact, there were three strong rallies that occurred during that year, making it a hectic volatile trading year.  The rallies were scary but substantial as to allow one to recover losses when quick enough to play the market’s movements.

In 2014, the market’s climb was entirely different.  It was subdued and sustained.  It did not have the kind of volatility that went along with the market in 2013.

And while the market was relatively less pressured, the returns or losses were thus safer than those of 2013.

In 2015, the market appeared to have made a repeat of 2013. The market climbed higher after Lent and the subsequent month, only to slowly drop until the end of the year.

The market for 2016 may have the potential to power a similar strong advance.  One good sign is the market’s displayed ease of quickly hitting the psychological take off point of 7,000.

With it, the market’s climb could be as steep as that of 2013 and 2015. But the climb could also be short.

With the unfolding external factors, however, things may turn out different this year.  Hopefully, they turn out tamer.

(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)