From worse to better

At the end of the Friday session last week, the Philippine Stock Exchange index (PSEi) closed flat at 7,889.33 with an unremarkable gain of 1.02 points. The broader All Shares index, meanwhile, closed lower at 4,735.12 as it declined by 1.73 points or 0.04 percent.

For the day, foreign investors bought P3.469 billion worth of shares and sold P3.621 billion for a net selling position of P152.367 million. Total value turnover was relatively low at P6.901 billion.

However, total transaction volume was comparatively high at 2.029 billion shares. This indicated that market transactions for the day revolved around the trading of low cap stocks.

Sometimes, when trading gains are marginal, decliners outnumber advancers. Last Friday, there were 104 decliners versus 102 advancers, with 46 issues unchanged.

Still, the PSEi made a weekly gain of 46.17 points or 0.58 percent coming from the previous week’s close of 7,843.16.

Year-to date, the market has already gone up by as much as 1,048.7 points or 15.33 percent. To recall, the market ended at 6,840.63 on December 28, the last trading day of 2016.

The question now is: Is the uptick at the start of the month be considered a promising sign that the market is picking up pace and should be headed up?

If we are to look at its six-month performance, such thought may not be entirely remote. But when we look closer at the market’s monthly trading performances, they do not give as much comfort as they should.

When the market started the year, it immediately went into a gallop and closed the month of January at 7,226.70, posting a net gain of 386.06 points or 5.64 percent.

Suddenly, the market slowed down and almost lost its footing in February. It managed to close the month on positive ground, but on a small footing of 20.42 points or 0.28 percent at 7,247.70.

The market managed to climb higher in March, albeit with some difficulty, as it closed at 7,311.72 or a net gain of only 64.60 points or 0.89 percent.

What happened in April was fantastic. Trading activities moved at a faster pace, enabling the market to climb easily. The market closed at 7,661.01 with a total gain of 349.89 points or 4.79 percent.

The market continued to register a strong performance in May. It made a significant advance equivalent to 206.48 points or 2.89 percent as the market settled at 7,867.49.

The month of June was a total disappointment. It was at this point that the market’s pattern was reversed. The market closed lower at 7,843.16, with a loss of 24.33 points or 0.31 percent.

Bottom line spin

On a year to date basis, the market was up 1,002.52 points or 14.7 percent when it closed at 7,843.16 last June 30. The All Shares index, on the other hand, rose 579.05 points or 12.9 percent.

Of all the sectoral indices, the services sector posted the highest gain of as much as 29.5 percent.

Trading activity was also strong in the first half of 2017. Daily average value turnover was P8.08 billion, up by 7.5 percent compared to the same period last year. The stock market also had a net foreign buying of P22.04 billion in the past six months.

Capital raised in the first half of the year amounted to P106.74 billion, another indication of the market’s robust health.

This condition was made possible by a slew of factors, many of which were more local than foreign in origin. These factors have been individually mentioned in the past.

The most critical of these are the passage of the tax reform bill at the House of Representatives and the infrastructure program of the government. These two factors play a very important part in the market’s growth. They could easily reverse all of the positive gains the market have had so far.

Delays in their implementation and/or execution could make things in the market get worse first before they get better.