Only in the Philippines!
Market manipulation defeats the very essence of markets.
And for this reason, around the world, market manipulation, which includes price-fixing, has been heavily penalized.
Side note: Of course, that’s with the exception official interventions—which translates to political inequality. Yet such official interventions provide incentives for the non-public sector to do the same.
Anyway, some of the consequences of market manipulation seen in a variety of financial markets as shown below
1 Gold markets:
CNBC Deutsche Bank to pay $60 million to settle US gold price-fixing case December 2, 2016
2 New Zealand Livestock markets:
Scoop.co.nz PGW and Elders’ employees fined in price fixing case December 5, 2016
3 Malaysia’s currency derivative market:
Bangkok Post Australia banks admit to ringgit cartel November 25, 2016
4 World currency markets:
Bloomberg Six Banks Pay $5.8 Billion, Five Guilty of Market Rigging May 20, 2015
5 Libor Interbank rate:
Bloomberg Guilty Ex-Barclays Trio Ends Another Libor Chapter for London, July 4, 2016
6 Even China’s stock market, where State Owned Enterprises have been instrumental in shoring up prices, officials crack down on the private sector (price and volume manipulation):
Bloomberg: China’s ‘Hedge Fund Brother No.1’ Admits Stock Manipulation December 6, 2016
7 Singapore’s Penny Stocks:
Reuters, Singapore files charges in penny stocks market manipulation case Reuters November 25, 2016
8 Japan Stocks which has also been subject to official interventions, appear to clamp down on private sector manipulations.
Investing.com Japan watchdog recommends $1.9 million fine for Morgan Stanley MUFG, December 6, 2016
If one would notice, incidences of price rigging through manifold forms have only been intensifying. Yet these are most likely signs of historic times.
Now of course, while other markets attempt to impose discipline to market rigging, here in the Philippines, the same actions are considered as G-R-O-W-T-H. And despite the AMLA and SEC regulations, such are perceived as “normal” course of events.
The economic logic is simple, when the cost of manipulation has been low (because authorities tolerate them), manipulation proliferates!
Again, the lower the Phisix, the more intense and increasingly desperate attempts at price fixing the headline index.
Over the last two days, activities at the PSE has shown brazen manipulations.
Yesterday was a marking “dump”.
Today’s session can once again be characterized as another miracle transformation of “water into wine” with a marking “pump”!
Price actions have become a pattern.
First, today’s action.
If an early morning push fails, then an afternoon pump will likely be implemented (seen in both days). The difference will be in the efficacy of the pump.
In today’s session, the morning DUMP became an afternoon delight PUMP that culminated with a staggering 35.19 points or .53% price fixing close!
In short, throughout the day the Phisix was down. But the end day outcome changed. How? By magically converting a .09% deficit into an enormous positive .44%—all courtesy of the wonders of the market intervention floating phase!!!!
As I have noted repeatedly here, because of the skewness of market cap weighting, price fixing the index mostly requires tampering with the top 5-10 issues.
Three of the top 5 issues were responsible for lifting index to its closing level (rightmost window).
ALI, JGS and fixer’s favorite SM accounted for a whopping 25.32% of today’s market cap.
Just look at the astronomical 3.6% price fixing of ALI.
ALI closed the day HIGHER by a sizable 3.46%. This means that today’s mark the close pump of 3.6% contributed to MORE than 100% (104%) of today’s gains!!!!!!!! ALI was down by .14% before it closed 3.46%!!! Normal market pricing eh??????
JGS closed at +.86%. This entails that JGS’s red to green with a 1.5% marking pump was responsible for 174% of the day’s gains! Yes, this means JGS deficit of .64% miraculously became .86% gains!
What CANNOT be attained at regular session has to be fixed at the close!
And about half of SM’s 1.44% gains came from .7% pump!
And if I’m not mistaken the goal was to power the index higher by 1% or more, but unfortunately, only .44% was delivered because selling pressures dominated other PSEi issues!
And because many issues bled today, the gains by the three, to force the index to positive, had to be YYYUUUUGGEEE!!!! (to borrow Mr. Donald Trump’s meme)
Evidence of broadness of sellers? Losers led gainers by 112-68 or by 1.65 issues to 1.
The other firms as noted above helped support the three of the top heavyweights
But they were more about sectoral contributions.
I noted above that yesterday had another rare marking “dump”
Here it is.
After an early morning through mid-afternoon dump-fest, again the pattern surfaced: an afternoon delight pump went into operations.
Unfortunately, instead of a closing upside spike, manipulators decided to DUMP instead.
And coincidentally, THREE of today’s pumped issues were also yesterday’s MOST dumped!
ONLY IN THE PHILIPPINES!
As I said, this is NO stock market, but a price fixing mechanism cloaked under stock market/capital market.
Shame.
New York Post columnist John Crudele resonates with me in his comment on the Price Protection Team (Market manipulation creates serious risk for short-term gain December 3, 2016)
Anyway, everyone will be happy with this manipulation until it stops working. And then there will be hell to pay. And nobody will be able to say I didn’t try to stop this dangerous practice.
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