Markets have their peculiar way of resolving anomalies. (That’s why I trust the markets)
Remember, yesterday’s mindboggling record 1.55% “marking the close” pump which 2.15% gains sent the Phisix spiraling back to 7,800???
Well, the domestic stock market vehemently pushed back on this today as the PSEi plummeted 2.01% to expunge entirely the 1.55% pump.
Worst, the headline index gave back about 94% of yesterday’s 2.15% advances!
It seemed like poetic justice meted against manipulators.
This doesn’t mean today’s activities had been without attempts at price fixing.
Financials had furiously been pushed at the close (BDO +1.8%, BPI +.95%, SECB +1.14%). Unfortunately it was insufficient to do any material improvements. Price fixing at the financial sector lopped off only .05% off the pre runoff loss of 2.06%
What goes around comes around.
And another thing. Here is the PSEi 30’s PERs, as published at the PSE, based on September 16 closing prices. (given the weekend, one can go to the PSE website and confirm the numbers)
The PERs represent 2015 eps. (This incorporates SECB which replaced Bloom. By the way SECB has been a favorite by manipulators. Hence another new record high)
When SM declared a 50% dividend last August, the PSE didn’t adjust on SM’s PER to reflect on the additional shares issued. So it unduly “cheapened” SM’s PER. I wrote the PSE and told them that the adjusted PER was at 23.78 per share. So they revised the indicated numbers. As of today (September 16) close at 660, SM’s PER (2015 eps) was 27.75—as manifested at their website
This means that from July to September 16, the PSE has been broadcasting PERs based on 2015 eps. Yet the declared figure at the BSP’s website, as shown yesterday, seemed still anchored on the pre 2015 eps figures. The intent looks like to deliberately dampen the severely mispriced PERs.
Of course, when statistics are tortured enough, it will confess to anything. So one can cite pre 2015 numbers, or probably, “expected earnings” (ala Bloomberg) in order to sterilize the degree of mispricing. As a side note, that’s if expected earnings are fulfilled, but expected earnings have missed a lot in 2015-1Q 2016 with exception of 2Q 2016
But then again all these won’t take away the fact that the PSE remains the most expensive in Asia. Putting lipstick on a pig doesn’t take away the pig’s features.
And as today’s lesson shows, markets functioning as a process, eventually, resolve on existing imbalances—at its desired time. It may be tomorrow, it may sometime soon. But surely what is unsustainable won’t last.
Have a great weekend!
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