Phisix Breakdown: Politics Not Inflation Related

Philippine “Inflation” surged to its highest level in 9 years and got blamed for the Phisix breakdown. Nonsense.

First, the Phisix had been falling even prior to such news. In fact it has dropped in 6 out of the last 7 sessions. On the other hand, the Phisix rallied prior to the strings of losses even as “inflation” reached an “unexpected” (for our authorities) high. So inflation is nothing but an excuse.

Two, the biggest damage today were seen in Lopez owned companies…Benpres (-8.91%), First Philippine Holdings (-7.35%) and Meralco (-4.1%), all of which had borne the brunt of the selling pressures since the wrangling over the Meralco management emerged.

Phisix black candle, BPC blue, Meralco red and First Philippine Holdings green

True, the broadmarket fell but what needs to be understood is that this is more of a contagion related than inflation instigated carnage.

Third, as a matter of irony inflation means loss of purchasing power relative to high food and energy cost. Thus why has energy related investments plunged?

When government harangues or puts the blame on the market for any particular reason with threats to “intervene” by restraining property ownership rights for pretentious social purposes, then it is natural to expect market participants to flee from the market out of the fear of loss of equity ownership from its socialistic tendencies.

The blame should be on politics and not inflation.