The market and the elections

The presidential elections are less than a week away and the pace of the campaign has shifted to higher gear. Yet, the market last week still continued to move in a listless way.

This market sentiment is attributed to some of the basic issues stemming from the election front. For instance, the voting public is confronted with presidential contenders considered to be either suffering from credibility, dynamism, health and energy or surrealism. This makes the market understandably listless.

Fortunately, whoever among them is elected president, the country’s further development will still “somehow” go on. The country’s progress has been standing on strong economic fundamentals, thanks to some political gains.

The entry of a new President with his or her personal brand of politics may no longer be critical, compared to what a politically mature and better informed public can do to spur more economic gains for the country. Thus, the market is not in any way at risk of falling into the doldrums amid a declining trend. In fact, the market might be reversing its present course since it may have already possibly reached a “support” or turning point following last week’s trading results.

April performance

Notice that while the market had a losing streak last week, its daily losses showed a diminishing pattern.

On Monday, the market ended with a small day’s loss of 5.26 points or 0.07 percent. This grew to a bigger day’s loss of 38.21 points or 0.53 percent on Tuesday, exacerbated by the same uncertainties.

Despite being bugged by the same uncertainties, the market’s losses for Wednesday dropped to 31.39 points or 0.44. This was followed by another day’s loss of 17.97 points or 0.25 percent on Thursday. When the market settled on Friday at 7,159.29, the day’s loss dropped lower to only 3.27 points or 0.05 percent.

The significance of these trading results should become more apparent when we review the market’s trading performance three weeks prior. They should provide clues as to where the market would go.

It was only the first week of April at that time. The market had made alternate small gains and losses. At the week’s closing, the market ended with a very small weekly gain of 2.07 points or 0.03 percent only.

Foreign investors had been briskly selling at the time. They accounted for 52.82 percent of total market transactions. Since the market’s total value turnover only amounted to a daily average of P5.97 billion, local punters were able to prevent the market from being brought down by the selling blitz of foreign investors.

The selling activities continued the following week. But even if foreign traders controlled 53.51 percent of total transactions, the market managed to register a weekly gain of 74.10 points or 1.02 percent.

Daily average market value turnover was also observed to be high at P6.87 billion. It was 15.07-percent higher than the previous week. Most likely, local punters were aggressively chasing and buying up the prices of the main stocks that mattered in the market’s direction.

The market’s picture drastically changed on the third week. It fell 65.91 points or 0.9 percent even as foreign investors became net buyers and controlled 52.55 percent of total market transactions. The main reason for the drop could possibly be explained by the decrease in daily average turnover. It was not big enough to hold off the pressure on market prices. It was down 10 percent at P5.97 billion.

This usually happens when local bettors become net sellers. They took their time and waited for lower prices. In the process, the market slipped since foreign investors also had a bigger percentage of total market transactions.

During last week’s market performance, losses rose further to 95.1 points or 1.32 percent. Yet, the smaller daily losses could signal an impending change in trading pattern and direction. As mentioned earlier, the market may have mostly likely reached a support or turning point. The change may happen soon.

Bottom line spin

I may be wrong. What is certain, however, is that it will move to a positive territory.

If I will be forced to give a forecast as to when this will happen exactly, I don’t see it coming right after the election of a new president.

(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.)