Excited, but wary
The market made its third consecutive week of advance when the benchmark Philippine Stock Exchange index (PSEi) zoomed to 7,306.74 by the close of trading last week, ending in another high in this volatile yet exciting year.
The advance also powered the All Shares index to close at another year high, at 4,191.07, which was up 95.31 points or 2.33 percent.
All counters, with the exception of the industrial and mining and oil sectors, were responsible for the overall market’s continued rebound.
The services sector charged ahead with a net advance of 10.12 percent week-on-week on a total value turnover of P11.09 billion, which was 32.11 percent higher than its previous week’s record. The sector’s average price-earnings multiple or price earnings ratio (PER) was only 19.76x, which was somewhere at the lower end of the market’s overall price spectrum at the time.
The holding firms sector followed next with a net weekly advance of 2.56 percent on an equally substantial total value turnover of P9.77 billion. The sector remained to be the second most traded sector even if average PER was at the higher end of the market’s overall price spectrum of 22.23x.
This sector is now the market’s most preferred investment, growing 11.59 percent in the last four weeks. It has also bested all of the market’s sub-sectors with a year-to-date growth rate performance of 8.12 percent.
The property and financial sectors came in third and fourth place with an advance of 2.45 and 2.44 percent, respectively. Total value turnover for the property sector, however, was 53.18 percent bigger at P7.46 billion. Average PER was 14.82x for the financial sector and 19.67x for the property sector, rendering both sectors to be good hunting grounds for value stocks.
At its relatively high total value turnover of P7.49 billion, the industrial sector slipped on the back of an apparent sell-off and thus ended with a net loss of 96.02 points or 0.82 percent. This happened notwithstanding the sector’s average PER at only 20.06x.
As usual, the mining and oil sector finished last. What was encouraging was that it ended last week with a minimal loss of only 53.30 points or 0.46 percent. Total value turnover, however, still remained low at P1.42 billion.
Major leads
Positive developments to manage production output among international oil producers have improved oil prices recently. These same developments also improved the sector’s average PER to 21.28x.
The sector, as a result, had the highest growth performance among the sub-sectors of the market with a year-to-date growth rate of 9.48 percent vis-a-vis the general market’s 5.1 percent growth rate.
Four major leads in the last four weeks seemed to have powered the market’s continued advance. Not in chronological order, these were: the move of the European Central Bank (ECB) to come up with another stimulus program to support the Eurozone’s flailing economy; a recent announcement that the Fed would favor less interest rates hikes for the year in an apparent effort to ease strains caused by clashing monetary policies; the growing unity of oil producing countries to control production output and supply; and the rumored “conspiracy pact” made by the G-20 countries in Shanghai, China.
Bottom line spin
Although the market’s advances in the last three weeks looked pretty exciting on both technical and fundamental basis, “other risk factors” arising from the global economic slowdown and financial market turmoil could still make one wary.
The socio-geo-political issues that are playing out at present could easily throw away the progress so far made by current measures to shake the global economy out of its torpor.
(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)
