June 7, 2003: Nah, Today's Decline Was Hardly About Politics

Today’s hefty 48.02 points or 2.34% decline could easily be imputed to political concerns which I expect local ‘experts’ to mindlessly jump at.

However, dissecting on today’s activities we find that the drivers of the recent advance remains rather bullish with local equities as foreign money accounted for net inflows of P 166.758 million or about 19% of today’s aggregate turnover!

In addition, a rather striking observation is that the accumulation activities were seen over the broader market! Since foreign money accounted only for about 45% of today’s Peso turnover, this essentially translates to the locally led selloff.

It does appear that since the Phisix climbed by a stupendous 10.35% in just seven straight sessions, overseas investors anticipated the need for a correction and took defensive positions while taking on the gloomy local sellers.

Further, how can one conclude or extrapolate that the selloff was politically based when the Mining index jumped by 7%? Have not the political opposition used the opposition to the Mining Act of 1995 as part of their agenda? In short, if today’s reaction was politically induced then the Mining Index, whom should suffer from an ouster of the present administration, would have borne the brunt of the carnage. Apparently the market’s behavior today does not suggest of politics but rather on technicality. Read my lips....PROFIT TAKING.

Now Peso volume likewise was a lot less than the previous sessions which saw a frenzied run up, which goes to show that the ‘weak hands’ were today’s rulers. As far as the continuity of the downtrend, I’ll bet on the bulls.