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Last week’s importance

/ 11:10 PM July 23, 2012

Trading last week was not that bad. Weekly trading loss amounted to only 3.63 points or 0.07 percent, which was a far cry from the total weekly trading loss of 148.16 points or 2.76 percent the week before. Still, I still found trading to be disappointing like the mining policy—announced by the government also last week—which failed to excite the market.

What could only be positive about the trading results last week, however, could be the fact that the market’s losing streak was broken on Friday, not to mention that it was also the last day of trading for the week. The market closed in positive territory, albeit with only 21.52 points or 0.41-percent gain as it closed at 5,210.89.

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On the other hand, this close by the market in positive territory on Friday could be all that is significant. It may be the close that will make the difference needed to break the market’s falling direction as well as the lead to the market’s bottom.

More clues

FEATURED STORIES

The above observation may not be much. But if we extend our review over the bigger picture of the market, it could probably lead us to more clues. For one, from June 18 to 29, the market appeared to be on a high ride as it made a total cumulative weekly advance of 315.78 points on a total volume of 30.62 billion shares and value turnover of P97.04 billion.

About 45.24 percent of total value turnover was incurred on June 29 due to the big block sale on San Miguel Corp. (SMC) amounting to P37.89 billion. Along with the SMC transaction, the market’s momentum grew stronger and spilled over the following week to even set the all-time record high of 5,365.70 on July 3.

On July 4, the market hit the session’s high of 5,403.16 but only to close lower near its session’s low of 5,351.74. After this failure of the market to reach a new record high, it went into an alternating trading mode that led to a negative close one day and a positive close the next day, which in the end still resulted on a weekly gain of 116.27 points or 2.22 percent for the week ending July 6.

If we are to use the cited time frame in the market’s movement, its last climb crested on the week ending July 6. From then on, the market was again on a fall that seemingly could have ended last July 20.

SMC block sale

Innocuous as it may seem, the SMC block sale was significant in the market’s apparent breakout and establishment of a new record high because big block sales are one of the latent indicators of investors’ outlook on the market’s future. They, therefore, embody overall investors’ confidence. To digress, the SMC block sales was the result of a transaction involving the purchase of 493,375,183 common shares for P75 each by Top Frontier Investment Holdings Inc. (125,234,667 shares), a privately held firm controlled by the group of former trade minister Roberto V. Ongpin, and Master Year Ltd. (368,140,516 shares), the Cayman Island-registered company whose sole director and shareholder is Ramon S. Ang.

As previously disclosed, the total direct ownership of Top Frontier amounted to 36.58 percent or 1,221,878,025 common shares of SMC. Its indirect ownership as previously disclosed amounted to 6.77 percent or 225,234,667 common shares of SMC. From the said block sales, Top Frontier is the direct owner of an additional 3.75 percent or 125,234,667 common shares of SMC. Beneficially and directly, this brings the total ownership of Top Frontier in SMC to 47.1 percent or 1,573,100,340 common shares.

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Sold were 62,075,898 common shares equivalent to 1.86 percent from Black Stallion Ranch Inc. and 63,158,769 common shares equivalent to 1.89 percent from Misty Mountains Agricultural Corp. For Master Year, the purchase of 368,140,515 common shares of SMC was equivalent to an indirect ownership of 11.02 percent.

Since the sole director and shareholder of Master Year appears to be Ramon S. Ang, with the latter having previously disclosed that his direct ownership was 376,653 or 0.01 percent, his total beneficial ownership in SMC after the block sales transaction was now equivalent to 368,517,169 common shares of SMC or 11.03 percent.

Other transactions were: 1,082,871 common shares or equivalent to 0.03 percent of SMC also from Black Stallion; 94,738,250 common shares or equivalent to 2.84 percent of SMC from Primavera Farms; 47,369,061 common shares or equivalent to 1.42 percent of SMC from Silver Leaf Plantations Inc.; 47,369,039 common shares or equivalent to 1.42 percent of SMC from Meadow Lark Plantations Inc.; 63,158,769 common shares or equivalent to 1.89 percent of SMC from Pastoral Farms Inc.; 60,969,824 common shares or equivalent to 1.82 percent of SMC from Lucena Oil Factory Inc.; 48,863,898 common shares or equivalent to 1.46 percent of SMC from Metroplex Commodities Inc., and 4,588,804 common shares or equivalent to 0.14 percent of SMC from PCY Oil Manufacturing Inc.

Bottom line spin

By today, the consequence of the market’s movement that ended with a positive close last Friday (the result of which mitigated the market’s hard fall the week before to a slight loss of 3.63 points or 0.07 percent only), should start becoming evident.

First, it should have been at least a manifestation of the market’s expectant positive outlook on the delivery of P-Noy’s Sona.

Second, it could also prove to be the market’s bottom and turning point from its current trend as fed by the market’s positive reception and acceptance of P-Noy’s message in the Sona, which should be largely about an explanation of how his administration will hit the growth targets of the country that may involve public spending and investments on infrastructure, agriculture and tourism to spur rapid and inclusive economic growth.

Third, it may be the start of a consolidation phase, which in the end will still prove to be the market’s bottom for the rest of the year.

(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.)


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