So far, so good

The market, at the start of the week, immediately went into a three-day advance. It detoured into negative territory on Thursday but resumed course on positive territory on Friday to post a modest gain that broke a two-week decline.

This drove the market to end higher with a weekly gain of 8.66 points, or 0.17 percent, when it closed at 5,219.55 with the All-Shares index at 3,467.3, up 29.08 points, or 8.85 percent.

Wall Street did better. Its major indices took off. “The Dow Jones Industrial Average (DJIA) was up 188 points, or 1.5 percent, to end above the 13,000 mark, a psychologically important level it has not crossed since early May.”

The S&P 500 and Nasdaq were also up. S&P gained 26 points, or 1.19 percent, and Nasdaq gained 65 points, or 2.2 percent.

As a result, the DJIA ended 2 percent higher on a weekly basis while the S&P and Nasdaq at 1.7 percent and 1.1 percent, respectively.

To summarize the market’s trading results last week, we can probably describe it—using the often quoted old cliché—as “so far, so good.”

As implied by the nature of its current situation, however, this may mean the market—or the markets the world over—will continue to tread on uncertain grounds.

Sale of trading rights
The market uncertainties have also led to the closure of some trading participants. The latest casualty is Sapphire Securities Philippines Inc.

In a memorandum released by the bourse last Monday, the trading rights held by the stockbrokerage will be offered for sale.

The bidding of the trading rights of the firm will be held on October 26 at 10 a.m. on the 3rd floor (conference room) of the Philippine Stock Exchange building, Ayala Triangle, Ayala Ave., Makati City.

The minimum bid price for the trading rights of the company was set at P10.5 million.

The deadline for registration and submission of requirements is not later than 4 p.m., August 30.

Applicants who have complied with the registration and submission requirements will have to undergo the pre-qualification process.

Those who pass the pre-qualification process will be given up to 4 p.m. of September 20 to submit their bid forms and bid envelopes.

At 10 a.m. of October 26, the sealed bid envelopes will be opened. This will be conducted by the membership section of the PSE.

All interested parties are directed to send their inquiries and clarifications to the membership section at the Ayala office of the PSE.

P.A.R.T.
While we have bad news, we also have good news that sprung out of the current market situation.

The Philippine Association of Religious Treasurers (P.A.R.T.) is slowly but seriously starting to look at investing in the equity market as part of its financial management program.

Having been exposed for too long to low returns from traditional fixed-income investments, association members are looking at the equity market for more income and capital growth.

Not really ignorant or inexperienced on equity investing—for they seem to be familiar with initial public offerings (IPOs)—the group’s members have also seen the failure of supposedly safe fixed-income investment instruments, like sovereign bonds. They are no longer safe and solidly secure as they used to be.

With what has been happening across the globe, particularly in Europe, sovereign debt securities in the past two years had led investors to lose so much.

I feel somewhat embarrassed that I wasn’t able to adequately walk them through the vital principles of investments in equities and of stock trading within my allotted time.

Based on their questions, the membership will no doubt get their handle on equity investing in a short while.

Congratulations to Sister Maria Lirio Gavan (SPC) for her indefatigable effort to bring the association closer to the capital market.

Bottom-line spin
The World Bank has lifted its growth forecast for the Philippines. On the basis of its recent study, the World Bank believes the country will grow by as much as 4.6 percent this year (from its previous estimate of 4.2 percent) and 5 percent next year.

This forecast was based on programs announced by the government, including investments in infrastructure and social services, which the administration said would spur economic growth to 5.0 to 6.0 percent for 2012 and 6.0 to 7.0 percent in 2013.

According to reports, the government had already spent P668.431 billion from January to May. The lowest the government spent in a month was P108.543 billion, which was made in January. It incurred the highest monthly expenditure in May at P151.304 billion.

Owing to this spending activity, it was reported that the economy grew by 6.4 percent in the first quarter.

The government now has the preliminary growth data for the second quarter. However, these are still subject to revision. The final estimates based on more complete data will still come. It will be interesting to know by how much the economy grew with the increase in government spending to P216.857 billion in June to hit the programmed spending target for the first half of P885.288 billion to meet its growth goal.

To recall, the government budgeted P1.84 trillion for 2012, with the estimated revenue collections of some P1.561 trillion, to incur a fiscal deficit of P279.1 billion (which is equivalent to 2.6 percent of gross domestic product).

Having spent or allocated P885.288 in the first semester, the government has some P954 billion more to spend in the second half to pursue its growth objectives.

The economy’s performance based on the first-semester spending of the government may give us an idea on how much more will probably be achieved with the remaining funds.

The World Bank and the government agreed that growth would come from public spending, exports and investments, while the risks would come from the lingering eurozone crises and a possible slowdown in China. These factors, when mitigated, may just give the government growth targets a fighting chance.

In the meantime, as things will still unfold, the present situation is “so far, so good.”

(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.)