Flirting toward higher levels

It may still be difficult at this time to come up with a satisfactory forecast on just how the market will end this year. But as of now, it is quite acceptable to say the market will be flirting toward higher levels from now on.

The market did not fall back a bit last week after breaking through 7,000 the week before. On Monday, the market opened at 7,008.81, up 0.3 point from where it closed the Friday before. It hit the high of 7,044.51 and closed at 7,027.58, ending with a day’s gain of 19.07 points or 0.27 percent and rendering the market’s open as the session’s low for the day.

On Tuesday, the market opened higher again. This time, it opened with a more substantial margin of 17.59 points or 0.25 percent. Since the market hit the high of 7,086.31, the low of 7,039.76 and the close of 7,082.75 (ending with a day’s gain of 55.17 points or 0.79 percent), this meant market bulls (buyers) clearly overpowered market bears (sellers) in absorbing all stocks for sale that day.

On Wednesday, the market opened higher at 7,086.80, again, with a small margin of 4.05 points or 0.06 percent. With the market’s opening for the day identical to its session low, this meant the market tried to climb all the way up to the session high of 7,130.98 but was driven lower to close at 7,096.49 as the market ended with more supply of stocks for sale for the day.

There was no trading on Aug. 21, a nonworking holiday commemorating the assassination of former senator Ninoy Aquino, the current president’s father.

When trading resumed Friday, the market established a new session’s high for the year at 7,141.17.  It also established a new trading high for the year as it closed at 7,133.09. The market further realized a daily gain of 36.6 points or 0.52, making the market to make a weekly gain of 124.58 points or 1.78 percent.

Observations

Out of the four trading days of the week, foreign investors were net sellers on Monday and Friday. At the first instance, total market transactions of foreign investors amounted to only 48.7 percent. They ended as well as net sellers of P0.0030 billion on a buying and selling value turnover of P4.004 billion and P4.034 billion, respectively.

On Tuesday, overall business transactions slightly sled to 48.33 percent.  Foreign investors ended as net buyers amounting to P4.172 billion on a buying value turnover of Php8.23 billion.

On Wednesday, foreign investors’ participation on total market transactions increased to 49.21 percent and ended as net buyers at P0.364 billion.

Foreign investors’ participation jumped to 57.29 percent of total market transactions when trading resumed on Friday.  Interestingly, they came out as net sellers for the day of P0.285 billion on total value turnover of P12.445 billion.

For the week, though, foreign investors still ended as net buyers amounting to P4.220 billion on total value turnover of P43.407 billion, rendering their participation to overall market business transactions equivalent to an average of 50.26 percent for the week and 50.54 percent, year-to-date or since the beginning of the year.

On the other hand, all sectors of the market climbed up higher during the week on total value turnover of P43.185 billion.  Again, this was with the exception of the mining and oil sector which fell 0.38 percent on a value turnover that decreased 18.90 percent week-on-week.

Highest gainer for the week was the industrial sector with a weekly gain of 3.06 percent on a total value turnover of P12.375 billion.  It was followed by the services sector which made a weekly gain of 2.16 percent on a total value turnover of P11.676 billion.

Closely following was the property sector with a weekly gain of 2.05 percent on a total value turnover of Php5.045 billion total value turnover.

Even with a bigger total value turnover of P9.018 billion, the holdings firm sector only managed to climb up or grow higher by 0.91 percent, while the financials sector only managed to grow 0.47 percent on a total value turnover of P3.665 billion.

Looking more closely, the financials and holding firms sectors suffered a decrease in total value turnover week-on-week, along with the mining and oil sector as mentioned earlier.

As of last Friday, too, the average price earnings ratio or PER of the PSEi had risen to 22.26x compared to the week before which was estimated at 21.92x.  Likewise, the All-Shares index PER had risen to 20.28x from 20.14x.

On a per sector basis, the week-on-week changes were as follows: financials sector, 18.53x from 18.44x; industrial sector, 21.74x from 21.42x; holdings firm sector, 18.20x from 18.06x; property sector, 36.31x from 35.63x; services sector, 28.35x from 27.67x; and mining &oil sector, 33.18x from 33.21.

In the meantime, the benchmark Philippine Stock Exchange index or PSEi was able to climbed up 1,243.26 points or 21.11 percent since the beginning of the year.

Bottom line spin

Admittedly, the market’s very favorable status has been all along animated by the active participation of foreign investors.  However, something seems to be animating the market even more lately.

In the foregoing review, local investors are starting to become more dominant in the market’s overall trading process.  This trimmed down market participation of foreign investors to only 50.54 percent on the average since the beginning of the year.

More importantly, local investors are fast becoming buyers than sellers in the market place—a significant development which in past periods had made many market rallies into more than just their ordinary meaning.

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.