“Brexit” and the faltering yuan have also put pressure on Asian stocks.
Chinese stocks via the Shanghai index submerged 3.21% to retreat back to the 2,800 levels.
Meanwhile Japan’s Nikkei crumbled by a significant 3.5%.
Post trading hours, the Fitch cut Japan’s Credit Outlook to Negative.
And it has been more than just China and Japan, almost the entire Asia was in the red today.
That’s with the exception of the Philippines
Reason? Because the Philippines has been said to be IMMUNE to external developments! And the reason for such imperviousness has been “domestic demand”.
And the above should signify a demonstration of “domestic demand”!
Domestic demand channelled to brazen price fixing at the PSE.
Since 4Q 2014, almost every time global markets took a beating, one would notice panic buying sessions at the PSE. Such orchestrated collusive activities appear to be designed to project “resiliency” of Philippine equities from exogenous shocks.
And the operation usually starts after the benchmark hits the early session lows. And such panic buying episodes accelerates during post lunch recess session (which I call the afternoon delight) and culminates with “marking the close”.
It's been no different for today. Down 1.3%, index managers went into action through the session end. At the last second of the regular trade, the PSEi was just down by .41%
Yet in today’s magnificent 'marking the close', the PSEi soared by a HUGE 1%!!! So not only has the PSEi’s pre market intervention phase losses of .41% been reversed, the headline index zoomed by an eye popping .59%!!!!
And that would mean a one day 1.89% price swing! Awesome!
It is as if the index managers have been in trepidation of a return below 7,500. So to borrow from ECB’s Mario Draghi “do whatever it takes” they did everything in order to keep the index afloat.
As I have been saying, these are coordinated actions. Today, 3 industries benefited from this massive index pump, the financials, holding and property.
And essentially 5 issues delivered the meat of the pump.
To cite some examples. Metrobank soared from a .6% deficit to close up by 2.34% through a staggering 2.94% marking the close pump!
95% of BPI’s 2.63% end of the day gains were through the market intervention phase's 2.5% pump!
As you can see, the PSE doesn’t need to operate on a daily 5 hour basis. Since price fixing has been almost the order of the day, trading sessions should just be trimmed down to 30 minutes: 10 minutes runoff, 6 minutes market intervention phase and 14 minutes for opening and regular trading session. This should mean lot of savings for brokers since prices are the consideration rather than the volume.
And only in the Philippines can one see such fantastic price fixing activities!
In China where the government openly intervenes, all pumping sessions have only accrued to eventual losses. The SAFE (State Administration of Foreign Exchange) or the administrative arm of China’s central Bank the PBoC (People’s Bank of China) have been reported to have increased ownership in 13 listed companies last April. So aside from State Owned Enterprises and private stock brokers under the behest of the Xi regime, after all the massive interventions since the crash in July 2015, Chinese stocks have remained in doldrums and close to the bottom. Today's quasi-crash is a reminder of the impotence of market manipulations
Perhaps the PBoC should seek the services of our index managers!
Yet if market pressures from tightening conditions should escalate, which may find pretext from Brexit-Yuan dynamic duo, we shall see how truly immune the Philippines will be.
Instead of reforming the Philippine capital markets so it can improve to better serve the populace through the efficient transformation of savings into investments, such manipulations will only mean a setback or even a throwback of progress.
Bubbles.
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