July 28 Philippine Stock Market Review

July 28 Philippine Stock Market Review

Voila! As precisely diagnosed, Wall Street’s vigorous bounce provided the springboard for the domestic market’s sizzling jump of 22.51 points or 1.44%.  Ingredients were as accurately prescribed, foreign buying to bolster the index and sanguine local investors to provide the icing on the cake. 

The rebound in New York certainly did shore up the Asian bourses with Japan’s Nikkei 225 leading the region with advances of about 1.74% as of this writing.  11 out of 15 or more than 70% of the region’s index are currently manifesting gains with the Philippine benchmark index being the second to Japan. Only China has sustained moderate losses while the declines in India, Indonesia and Taiwan are marginal and could swing to the upside at the end of the trading day.

Pent up foreign infusion of capital to select index heavyweights indeed propelled today’s major index to an astonishing climb on moderate volume of P 505.650 million or US $ 9.03 million.  Even as domestic investors dominated the market with 60% share of the total turnover, foreign investors injected P 158.005 million or an equivalent equity accumulation of 31.25% to the traded volume, which simply means that locals sold out heavyweight issues to perky foreign investors to speculate on third tier issues.

Of course sentiment was primordially bullish; advancing issues bludgeoned declining issues 49 to 25 or almost 2 to 1, industry sub-indices were all green except for the ALL index on lower Manulife and Sunlife prices and foreigners bought twice more issues than it sold, aside from the recorded NET INFLOWs from overseas money.

PLDT (+3.65%), SM Primeholdings (+1.69%), First Philippine Holdings (+1.81%) and Jollibee Food Corporation (unchanged) were the major beneficiaries of foreign capital.  Among the index heavyweights 5 of the 8 scored major to moderate inflows while two, Ayala Corp (unchanged) and San Miguel B (unchanged) had negligible capital flows and only Metrobank (unchanged) figured a modest outflow. 

Among the industry sub-indices the OIL index spearheaded the domestic investors appetite for speculative activities and surged 9.6% while the other extractive industry, the MINING index reached its highest level since February or during the past five months on a noteworthy 3.46%, even as global prices of metals were flailing during the recent sessions on a ‘Greenspan engineered’ resurgent US Dollar.

Local investors whose underlying outlook remains optimistic prefers to treat the stockmarket as an alternative to PAGCOR or the government mandated gambling outfit or Casino.  And the flavor of the week remains to be that of the LUCIO TAN owned companies on, once again stories dramatizing revival and recoveries.  Tanduay Holdings closely hit the PSE-imposed ceiling up a startling 49.42% followed by Baguio Holdings with another fabulous 48.88% gain for the second straight day, Macroasia Corporation was seventh among the top winners of the Tan Group of companies higher by 13.51% for the EIGHT session for an accrued 171.43% gain, WOW! 

The other NON-Tan Group but on the top ten list of winners are Centro Azucar de Tarlac (+44%) on third spot, Boulevard Holdings (+26.66%) fourth, BALABAC Resource Holdings (+20%), Oriental Petroleum (+18.75%) sixth, Swift Foods Inc (+12.9%) eighth, Kuok Philippine Properties (+12.12%) ninth and Oriental Petroleum B or foreign shares ‘B’ (+11.76%) tenth.

Yesterday’s outside day reversal DID validate its usual immediate term move and is likely to LEAD the index higher to test the resistance levels at 1,594 (triangular), 1,600 (psychological) and 1,620 (major-three year).  Given that the outlook by the locals are manifestly bullish but hampered by the lack of volume, the market’s tendency is to either move higher or move sideways largely dependent on the scale and intensity of foreign instituted buying. 

On the risk side, the major drawback IS the ‘stalling’ or the loss of momentum seen with the US equity markets, which has thus far served as the PARADIGM for most of the Global bourses.  Any major ‘shocks’ on the downside COULD be expected to SPILLOVER to Global bourses including ours.  The Philippines’ major risk would come from torrential selloffs by foreign investors, who had, in 2003, goosed the domestic market to its current levels, but so far US FED Chair Greenspan’s telegraphed or ‘measured’ pace of rate increases reveals renewed appetite for emerging market assets.