Thursday, July 01, 2004

July 1 Philippine Stock Market Review

Today’s trading activities marked an impressive display of optimism mainly led by our local investors. The key Philippine equity market benchmark, the Phisix, climbed a modest .9% on significantly expanded volume of P 830.25 million, almost double the daily average of the last two trading sessions.

Local investors dominated the trading activities, accounting for 53% of cumulative peso turnover, even as foreign moolah posted positive inflows worth P 20.892 million. Market breadth was lopsidedly in favor of the Bulls as advancing issues clobbered declining issues by 56 to 15, or by a ratio of more than 3 to 1. In other words, while foreigners shopped on select heavyweights, local investors bought up the broadmarket.

FOUR of the eight index heavyweights chalked up gains for the day, led by foreign propelled buying on PLDT shares (+2.17%), followed by locally supported Globe Telecoms (+1.82%), Ayala Corp (+1.75%) and San Miguel (+.86%). Ayala Land, Metrobank and SM Primeholdings closed unchanged while Bank of the Philippine Islands (-1.16%) was the sole heavyweight issue that was in the red.

Aside from PLDT, foreigners scooped up shares of Ayala Corp, Ayala Land, First Philippine Holdings and Petron. On the other hand, capital outflow from overseas investors were recorded in GLOBE Telecoms, Ginebra San Miguel, Meralco B, Bank of the Philippine Islands, Equitable Bank and ABS-CBN Preferred Shares.

Except for the banking and financial sector index, all other major indices recorded gains for the day. The Small and Medium Exchange index was unchanged.

What was quite palpable in today’s activities was that the local investors dabbled with the second tier issues or in the market player’s jargon the so-called ‘trader’s stocks’. Based on percentage growth and liquidity of the issues, today’s best performers were Empire East (+16.67%), followed by DMCI Holdings (+14.28%), C & P Homes (+14.28%) and Metro Pacific (+10.71%). All of these second tier issues are mostly in the real estate related industries, which as of today have outperformed their heavyweight counterparts who were unchanged, except for Megaworld (+ 1.75%).

The US Federal Reserve, as anticipated, has raised its overnight lending rate, which has been pegged since June of last year to its lowest level since 1958. The quarter percentage point hike marks the FED’s first rate increase since May 2000 and was among the June 30th most sought after especially by the investing world. The global markets have so far responded with equanimity. The Asian markets are trading mixed as of this writing.

In the domestic arena, foreign activities have notably been pared down, although they have still been on the long side of the trade which apparently are now geared towards select issues, in contrast to last year’s conspicuous broad market buying. However, what seems to be a positive development is that local investors have gradually taken up the slack left by the aggressive buying of overseas investors. The local bullish optimism could underpin the ‘transition or honeymoon rallies’ seen in each of the government turnover that the Philippines had since 1986.


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