Increasingly desperate times calls for increasingly desperate measures
With sustained declines, the pressure to keep the Phisix within spitting distance from the Maginot 8,000 line seems to be mounting. Since each declines translates to the widening of distance from the recent highs, then this calls for the intensifying use of marking the close to buoy the index.
Interestingly, the Philippine Stock Exchange was under heavy selling pressure the entire day.
Nevertheless, regular price fixing actions went in operations. An afternoon delight pump was attempted (light blue downward arrow on Bloomberg’s intraday chart) at post lunch recess. Curiously, it was foiled.
So up to the last 2 minutes the PSEi was down by a huge 1.6% but was pumped to 1.4% about a minute (upper left) prior to the market intervention phase. A new modus has been in operation. This involves a last minute pre-market intervention pump to amplify the momentum on marking the close thrust. This looks like an abbreviated afternoon delight but implemented at the (one to two) last minute/s.
This also could have been meant to reduce the scale of marking the close. I discovered this only last week. Perhaps a cheaper means to attain the objective.
Nevertheless, at the runoff period, the deficit of 110.11 points was chopped by an incredible 59.55 points or more than half or 54%! This sent the Phisix down by 50.56 points or .64% at the close! Juxtaposed in the above are the images of the PSEi at the market intervention phase and at the close.
As shown above, the marking the close pump of 59.55 points was even LARGER than the 50.56 points deficit at the close! That’s the magnitude of the pump used to save the 7,700-7,750 level. The PSEi hit a low of 7,719
Last week, the degree of price fixing involved an average of 22 points per session. Today this has more than doubled!
ONLY IN THE PHILIPPINES!
Again understand that to push the index requires a coordinated and synchronized pump on several market cap heavyweights—mostly from the top 10 of the index.
The effects of which can be seen first from the sectoral performance.
With the exception of the services, all four mainstream sectors were beneficiaries of the frantic pumping.
Now detailed into particular issues, here are the eyepopping numbers.
Largest market cap SM soared 2.3% to end the day down by only .43%! This means SM was down by as much as 2.73% just a second prior to the intervention phase.
With Newton’s Law’s hounding JGS, the issue spiked 2%, which reduced losses to only 1.28%. This means that the pre marking the close losses totaled a considerable 3.28% for JGS!!!!
Metrobank closed down .91%. But this has been alleviated by a 1.34% pump which implied for a 2.25% deficit prior to the closing numbers!
47% of URC’s 3.83% spike was due to the 1.8% marking the close!
SMPH closed unchanged today. But it was down by 1.4%, a second prior to the transition to the runoff period!
Shocking numbers all intended to pump the index
What couldn’t be done in regular session had to be manipulated at the close!
All actions have consequences. Not only has these severely inflated valuations of individual issues and the index, such compounds on distortion or in the fundamental function of the stock market as a discounting mechanism through price discovery.
The end result from the above is the continuing buildup of imbalances or enlarged detachment between fundamentals and prices, and their non stock market ramifications—e.g. inflated collateral values (for credit and M&A functions) and more
Yet the greater the imbalances the larger the probability for a violent market clearing process.
In short, the obverse side of every artificial credit financed boom is a calamitous bust
Bonus chart: Will China's SSEC serve as a template for the PSEi?
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