Phisix: Another Fantastic PUMP...and DUMP (May 29) Session!

Philippine stocks increasingly look like a sick joke. The reason I make such a harsh assertion has been because Philippine stocks have become a wretched playground for market manipulators. 

And it has not just been a playground, it has also become a tool for political propaganda: Record stocks—as consequence of manipulated pump on select index sensitive issues—intended to show “prosperity” via G-R-O-W-T-H supposedly due to political actions, even when the core or about half of the population of Philippine stocks have been in bear markets! As side note, due to this week selloff there have been many new bear market recruits!
 

Today marks another grand showcase day of PUMP and DUMP!

Given the sharply oversold conditions, it would be natural for the domestic stocks to experience a rebound.

So domestic stocks started the day with an upside move gradually. But then, it seemed that this oversold bounce has provided index managers with the opportunity to conduct their tactical 'panic buying day' stratagem.

So panic buying day it would be! Panic buying momentum picked up going through the lunch break with the major bellwether grabbing gains of about a stunning 2.2+% which marks the day's zenith.
 

Unfortunately, post lunch, the momentum seems to have faded with four issues in the top 20 actively traded board as suffering some signs of selling pressures. The four issues were GTCAP, MBT, JFC and AGI.

These four issues sharply fluctuated from significant losses to marginal gains. The heavy volatility in them looked like repeated attempts to paint the 20 most traded issues as part of an all green (or positive) screen.

Additionally, given that the Phisix has materially shed its gains to about 1.55%, by the late afternoon session, the afternoon delight pump went into action with the key property issues ALI and SMPH as main thrusters to lift the index.

I suspected then, that sellers may just be pandering with index managers for the latter to set the day’s highs before they unload at the close.  This perspective I acquired from the same pump and dump experience last March.
 

Well my suspicions apparently were validated. Sellers must have used the same measures as the index managers in the pumping of the index!

Sellers massively dumped stocks in all major sectors led by banks (lower left)!

Of course, it could also have been that some pumpers broke ranks with the cabal to unleash their last moment selling….that’s perhaps in recognition of signs of intraday weakness in maintaining the gains! I do not lean to this thought though.
 

The Phisix was up 1.9% until the last minute before the ending dump which erased 46.8% of the day’s gains. The domestic benchmark closed up by ONLY 1.01%!

As example of major dumps; just see how the BPI’s gains suddenly transformed into a big loss (-1.01% for the day) while BDO’s huge margins had substantially been sliced (BDO up by 1.89% for the day from 3.44% a minute prior to the run off session)

Curiously today’s fantastic early rip has hardly been convincing even as winners outclassed losers by 106 to 68! Today's 38 margin by the winners pales in contrast to the daily margins dominated by losing issues from Monday through Thursday.

But the Peso volume was huge at Php 23.52 billion due to a cross sale at GTCAP. GTCAP’s volume was at Php 9.2 billion with Php 2.6 billion of net foreign buy.

Even without the GTCAP cross trade and the Php .9 billion block sales I estimate today’s board volume at around Php 11 billion

Finally there’s hardly any session without some signs of rigging.

Yesterday after the GDP announcement DUMP, there had been another spectacular last minute pump.

The marking the close pump erased 38% of the day’s losses. The Phisix closed down at 1.23% from 1.8% with just a minute of difference.

And a lot of those index pumps had been due to EDC and Globe.

In the run up to May 2013, there had been very few instances of gaming of the system as broad markets supported the record ramp.

Today, in view of the lack of market  breadth, rigging of the marketplace has become so rampant, which is actually the reason behind the glaring disparity between the performance of index and the broader market.

And these are happening right under the noses of regulators.

Market manipulation distorts the price discovery function of markets. The consequence of which has been the massive deformation of prices, valuations and trading activities. And such distortions eventually will lead to violent adjustments.

This week’s bloody -2.94% loss represents an appetizer of what will happen when the market clearing process takes over.