October 11 Philippine Stock Market Daily Review
Oil Again??!!
I have argued all so often that oil has had little to do with the latest market correction. First of all, oil even at the $53 per barrel level crude oil is still way below its inflation adjusted high of about $90 per barrel in 1980. Second examining the market internals shows us that these corrections are a matter of continued profit taking instead of the much dreaded ‘oil’ factor.
First, the Phisix 14.5 points or .79% decline was mainly brought about by the corrections in ONLY three heavyweights, specifically Globe Telecoms (-2.69%), PLDT (-.33%) and Metrobank (-1.8%) among the 8 index heavyweights. The others namely, Ayala Land, Ayala Corp., San Miguel A and B, Bank of the Philippine Islands and SM Primeholdings were all UNCHANGED. Don’t tell me that oil has little to do with the business operations of these neutral heavyweights while rising oil prices would heavily hamper the telecom sector’s operations.
Second if oil HAD BEEN THE (spelled with a T-H-E) factor then there would have been rotations towards the defensive stocks such as energy utilities and oil exploration sector, food sector and banks. Meralco A was down 3.1%, Meralco B was likewise lower by 1%, First Philippine Holdings fell 1.8%, oil refinery Petron down 1.7%(!!!), Independent Power Producer Trans Asia lower 1.8% with only Salcon Power up 2.7% on a single trade. Moreover, the OIL index remained unchanged as Oriental A and B shares were unchanged. Meanwhile Petroenergy resources climbed 2% together with Philodrill B up 4.8% on lean volumes. So higher energy prices are supposed to benefit these companies in an oil ‘shocked’ economy, so why haven’t they been rising? Ah, of course, you’d say that oil will compress consumption and the local investors are so future oriented hence the decline in prices. Well for your information, oil and energy issues are considered as inelastic demand companies hence are subsumed as defensive stocks, these are necessities that an individual can hardly do without even during a crisis. Repeat these words these companies are D-E-F-E-N-S-I-V-E!!! And to say that local investors are future oriented, is an insult to common sense. Most stocks they are driving up hardly have the cash flows to back their existence except that most of these issues are the punter’s favorite (note not trader or investor but P-U-N-T-E-R-S) subject to ‘Tall tales’ of buy-in’s, mergers, deals and other claptrap.
Now taking a look at the main losers, aside from the major telecom heavyweights, these are mostly the companies that EXPERIENCED RECENT SPURTS namely Digitel (-12.34%), Metro Pacific (-7.14%), DM Consunji (-10.54%), Empire East (-7.14%) and Leisure and Resorts(-16.67%). In addition, the said issues are ranked within the top twenty most actives. In short, these outperformers or celebrities of the most recent pasts have succumbed to profit taking. Read my lips, P-R-O-F-I-T T-A-K-I-N-G.
And to consider, foreign money continues to cushion the market’s decline. Foreign money accounted for a net inflow of P 37.952 million. Aside, overseas investors bought more issues than it sold, hence the continued bullish outlook of overseas money to local equities IN SPITE of HIGHER OIL Prices!!!!
What if the market rises during the midweek and oil prices remain within $50 barrel levels, what would be the so-called experts say? Amidst a denial for a market to climb in rising oil environment, they probably say ‘technical rebound’ or influenced by so-so market. Such Hooey!!
So if I was an analyst whom would adamantly argue that oil has been the cause, then I am simply not analyzing but presuming based on headline news and common known sentiment. These analysts are definitely NOT worth their paychecks.
Oil Again??!!
I have argued all so often that oil has had little to do with the latest market correction. First of all, oil even at the $53 per barrel level crude oil is still way below its inflation adjusted high of about $90 per barrel in 1980. Second examining the market internals shows us that these corrections are a matter of continued profit taking instead of the much dreaded ‘oil’ factor.
First, the Phisix 14.5 points or .79% decline was mainly brought about by the corrections in ONLY three heavyweights, specifically Globe Telecoms (-2.69%), PLDT (-.33%) and Metrobank (-1.8%) among the 8 index heavyweights. The others namely, Ayala Land, Ayala Corp., San Miguel A and B, Bank of the Philippine Islands and SM Primeholdings were all UNCHANGED. Don’t tell me that oil has little to do with the business operations of these neutral heavyweights while rising oil prices would heavily hamper the telecom sector’s operations.
Second if oil HAD BEEN THE (spelled with a T-H-E) factor then there would have been rotations towards the defensive stocks such as energy utilities and oil exploration sector, food sector and banks. Meralco A was down 3.1%, Meralco B was likewise lower by 1%, First Philippine Holdings fell 1.8%, oil refinery Petron down 1.7%(!!!), Independent Power Producer Trans Asia lower 1.8% with only Salcon Power up 2.7% on a single trade. Moreover, the OIL index remained unchanged as Oriental A and B shares were unchanged. Meanwhile Petroenergy resources climbed 2% together with Philodrill B up 4.8% on lean volumes. So higher energy prices are supposed to benefit these companies in an oil ‘shocked’ economy, so why haven’t they been rising? Ah, of course, you’d say that oil will compress consumption and the local investors are so future oriented hence the decline in prices. Well for your information, oil and energy issues are considered as inelastic demand companies hence are subsumed as defensive stocks, these are necessities that an individual can hardly do without even during a crisis. Repeat these words these companies are D-E-F-E-N-S-I-V-E!!! And to say that local investors are future oriented, is an insult to common sense. Most stocks they are driving up hardly have the cash flows to back their existence except that most of these issues are the punter’s favorite (note not trader or investor but P-U-N-T-E-R-S) subject to ‘Tall tales’ of buy-in’s, mergers, deals and other claptrap.
Now taking a look at the main losers, aside from the major telecom heavyweights, these are mostly the companies that EXPERIENCED RECENT SPURTS namely Digitel (-12.34%), Metro Pacific (-7.14%), DM Consunji (-10.54%), Empire East (-7.14%) and Leisure and Resorts
And to consider, foreign money continues to cushion the market’s decline. Foreign money accounted for a net inflow of P 37.952 million. Aside, overseas investors bought more issues than it sold, hence the continued bullish outlook of overseas money to local equities IN SPITE of HIGHER OIL Prices!!!!
What if the market rises during the midweek and oil prices remain within $50 barrel levels, what would be the so-called experts say? Amidst a denial for a market to climb in rising oil environment, they probably say ‘technical rebound’ or influenced by so-so market. Such Hooey!!
So if I was an analyst whom would adamantly argue that oil has been the cause, then I am simply not analyzing but presuming based on headline news and common known sentiment. These analysts are definitely NOT worth their paychecks.
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