I just find it quite amazing anent the correlation between the movements of our currency vis-a-vis the US dollar and the stock market, as I have pointed in the past.
Yesterday, as the Peso depreciated quite substantially, our market dropped. Last night, as the US dollar fell against the Euro and Yen, Wall Street recorded a ferocious rally. Meanwhile our Peso was trading modestly higher this morning and the Phisix rallied moderately. It just shows how money flows have been a big influence to the stockmarket's trajectory.
Talking about money flows, if you read today's newspaper about the recent Philippine domestic bond offering, the 91-day T-bill rates have sunk by as much as 14 basis points while the one year coupon dropped by a notable 17.2 basis points. The 91-day papers was almost 6 times oversubscribed (bidded volume was P 11.28 billion against an offer of P 2 billion.)! To quote Businessworld, "Liquidity is at an all-time high, you can see it in the bids," National Treasurer Omar T. Cruz told reporters after the auction." With all these local money sloshing around in an era of low yields it is quite a puzzle why the risk aversion towards the Philippine stock market considering that a 'home bias' is a natural predesposition among investors in general. (Maybe Filipinos simply don't trust in themselves.) Albeit, today's gains in the Phisix was largely fueled by local investors.
Nevertheless, historically, the previous bullmarket was driven by the locals before foreign money joined the bandwagon, could it be the other way around this time? Well, I am inclined to think that despite the warts and all, the Asian Growth story whereby the Philippines is constituent of, should eventually goad local investors back to their domicile market. By then the bull market phase would have been greatly amplified.
That's the way it looks from here,
Benson
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