July 12 Philippine Stock Market Commentary

July 12 Philippine Stock Market Commentary

Lacking the proverbial ‘wall of worry to climb’ the market drifted lower today as both local and foreign investors eased up on their portfolio positions.

The Phisix closed 6.21 points or .39% down on thin volume with Peso turnover amounting to only P 396.555 million. Cross trades accounted for 45.3% of today’s output, thereby reducing actual board transactions net of cross trades to a scanty P 216.902 million.

Market breadth was overwhelming bearish. Four index heavyweight issues declined, namely BPI down 1.19%, San Miguel local or A shares lower .85%, Globe Telecoms declined .59%, and PLDT fell .4% while the rest of were unchanged. Declining issues drubbed advancing issues 32 to 19, while all of the industry indices, except for the Property Index, registered declines. Moreover, foreign money recorded a net outflow of P 11.655 million with 14 of the 25 issues, which reported foreign money movements, posting outflows. Overseas money accounted for 66.24% of today’s Peso turnover.

This is the first in seventeen sessions where number of companies traded fell below the 100-benchmark.

The lean volume, declining number of companies traded and the dominant activities of foreign capital meant that local investors were either selling today or staying on the sidelines, while foreign investors were likewise in an easing mode. The good thing is that the retracements come in light volume while the drop in the main index benchmark was contained, meaning that today’s market reflected a deceleration from its previous ascent or in technical lingo a ‘correction’.

On a wider picture, the activities of the Phisix seem to move in consonance with our close neighbors. As of these writing, Thailand, Malaysia and Indonesia are all trading slightly lower while on a region wide basis the bourses are trading mixed, 9 declining against 6 advancing.

Finally, the only noteworthy activity today amidst the sluggish backdrop is the apparent panic-stricken oil index which fell a hefty 11.18%, its second straight session of bloodbath. Oriental Petroleum local and foreign shares dived 15%, Philodrill foreign shares dropped 9.09% while its local shares were unchanged. Ostensibly, these reactions are related to the ongoing drilling project at the Sulu Sea by the UNOCAL led consortium, as other non oil index members but key players in the drilling project likewise suffered from steep price drops, Basic Consolidated crashed 16.66% while South China Resources tanked by 9.09%. Again we note that these violent reactions could probably stem from insider information driven actuations indicative of an unsuccessful mission of the consortium to discover commercially viable oil or gas fields. However, these have yet to be disclosed in the PSE, as the latest disclosures reflect that the project is still ongoing and has yet to reach its targeted depth.