Prices are information. Prices signify fundamental information that facilitates economic calculation necessary for individuals (as consumers, as producers, as traders, as speculators) to conduct commerce. Stated differently, in economics, prices function to coordinate demand and supply towards their equilibrium or to a level of balance. Or, prices clear the markets by reducing discrepancies: shortages or surpluses.
So when prices are regulated, controlled or manipulated, the economic coordination mechanism of prices becomes distorted, impaired and or dysfunctional. Prices, thus, do not reflect on economic conditions. So instead of the market clearing process, price distortions enhance or magnify on economic imbalances.
The sad fact is that even experts (PhDs, MBAs, CFAs and etc…) do NOT seem to comprehend this BASIC level of knowledge.
Hence, manipulation of prices has even been cheered upon or celebrated.
This only shows that the “institutional” magazine has been totally unaware or clueless of what’s going on, or they have been “nudged” to consecrate deception and fraud, or perhaps cheating for them represents virtue.
Yet this is what constitutes the “Best stock market of ASEAN”
On the left represents the massive afternoon pump that climaxed with a mark the close pump or where “water into wine” last December 13. The loss of .26% magically turned into a .17% gain due to the incredible 29.86 points or .43% price inflation administered during the market intervention or the meet-up phase.
On the right is the blatant pump and dump that occurred last December 15. The PSEi plunged in the morning. But since stock prices cannot be allowed to fall, the afternoon delight pump went in motion. Unfortunately, index manipulators got a shock, instead of a closing bell pump, some decided to use the price increases from the afternoon pump to stage a dump at higher price levels! Karma!
Notice. Almost every afternoon there will be a massive coordinated pump. It is at the end of the day's transition where either pump or dump is used.
Here is this week’s breakdown of marking the close in points: Monday -4.34, Tuesday +29.86, Wednesday +3.58, Thursday -29.21 and Friday +7.6
The aggregate pumps for the week totaled 41.04 points or .6% of last week’s close at 6,850.71.
The aggregate dumps for the week amounted to 33.55 points or .49% again of the closing values of the previous week.
Total pump and dump at 74.59 points constituted a stunning 1.1% of the previous week’s close.
The Phisix fell by 2.73% this week or by 192.5 points.
This only shows that the pumps and dumps have only kept the headline index from revealing the true extent of volatility being experienced by the PSEi today.
Yet what has caused this volatility? Price distortions as evidenced by media’s pronouncements of the Phisix as the “most expensive stock market in Asia”
This is happening day in AND day out—only in the Philippines!!!
This week’s closing pump and dump has been a lot smaller, or may I say meeker, than last week’s 131.76 points or a shocking 1.9% of the December 9 closing price at 7,043.16. Total pump that week was 113.91 points with a net weekly pump (total pump minus dump) of 94.62 points. Yes, the headline index posted a weekly gain of 2.27% or a rise of 156.42 points. This means that 60.5% of that week’s advance was about painting the tape via marking the close!
End of the day quotes actually conceal on the outrageous deliberate price deformation or systematic price destruction of the markets.
For instance, December 16’s -.7% PSEi close, which was accompanied by a mere +7.6 points “marking the close” pump, could be a product of a failed either pump or dump operation.
As one would note, the property and holding firms had massively been pumped at the close (top window).
However, dumps on other big ticket issues, mostly reflected on the industrials and financials, contained or subdued or neutralized those pumps (top lower window).
There were more dumps than the pumps. The indicated issues have only been from .5% and above differentials (between prices last quoted during regular trading and the prices during the runoff to the close)
It’s a sign that either manipulators have lost coordination with each other or collusive power has eroded, or that selling pressure had been so intense that “targeted” operations were needed to bolster the headline index.
Both property and holding firms were mainly boosted by Sy owned companies.
The numbers for the two have been staggering.
The 2.2% pump on SMPH constituted 72% of the day’s 3.04% gains. SMPH closed the week up 2.13%. This means that over 100% of the week’s performance was mainly due to the last 6 minutes of meet up/market intervention phase. So the entire week’s performance can be considered as irrelevant as only last 6 minutes of Friday’s determined SMPH’s weekly performance.
It has even been worst with SM. SM was deep in the red and was pumped back to unchanged for the day. That’s a remarkable 2.3% market intervention pump! SM closed the week up .15%. This means that due to the last 6 minutes, SM -2.3% miraculously transformed to a weekly +.15%. All it takes is the market intervention (meet up) phase to shape the week’s performance.
It’s best to understand that both SM and SMPH command a market share weight cap of 19.5% as of Friday’s close! See why the need to push these two to offset the rest?
All these shows that for the manipulators, the headline index is the only thing that matters, hence these frenzied pumps.
And all these prompt for some critical questions: Why not just cut down trading time to half an hour? Also why not cut trading days to just half an hour in one day? Or why do the Philippines need a stock market at all, if prices are not allowed to function?
Just a side note. Some of the elites have been rumored as having provided support to their own stock/s. And such has been perceived by many as having positive significance. This is what has been seen. What has been unseen is that the maneuvering of prices of stocks translates to a wasteful employment or unproductive use of resources (which could have been better used for value added activities, say business expansion, enhancing or improving operations or business process, innovation, and etc…). Yet this hasn’t been about buybacks, but about price pumping. Example, see what happened to BW.
It also shows of the hubris or conceit that markets can be permanently controlled—the King Canute syndrome. It equally exhibits unhealthy actions, i.e. to prioritize the artificial propping up of stock prices may actually have been meant to shield or camouflage entropic or degenerative dynamics being nurtured within the company/ies—owned by the elite. Remember, the defunct and once Wall Street darling called Enron?
As an ardent disciple of the markets, it is likewise sad for me to see how stock markets have been perverted and corrupted. Stock markets are presently being used to bolster egos (Forbes wealthiest profile) and as means for implicit redistribution of wealth, enabled and facilitated by the BSP’s trickle down policies, in favor of these elites, instead of, as instruments for society’s capital accumulation (which is the stock market’s essential theoretical function).
Let me be clear, this is NOT a sweeping or wholesale censure or indictment of all the elites, there are numerous respectable and humble entrepreneurial elites out there whom have made their wealth in the service of consumers. Market entrepreneurs are my heroes (but this is beside the point). Present developments even tell us that some big named tycoons seem to know their limits, which is very laudable. Yet some others may have seen the BSP’s silver platter to them as a perpetual political privilege or an entitlement, hence, the possible and alleged stock market price fixing pumps.
Back to marking the close.
I have similarly come to understand that even non-manipulators have now been adjusting their trading positions to attempt to benefit from such routine ‘end-of-the-session spikes’. This shows how people are malleable to evolving conditions. That’s the good news.
But here’s the bad news.
More importantly, it also shows how people’s perspective of the markets has likewise evolved. Considering that such has now been seen as “normal”, the adoption to such changes reveal of the intensifying grotesqueness of the price distortions and the escalating degree of mispricing, from the gaming of the PSEi index.
Moreover, revoltingly, people are being conditioned to see fraud and deception as normal and legitimate!
Best stock market in SEA through daily price fixing? That’s not how markets work. It is a shame on the PSE for using technicalities to promote egregious mispricing.
Equally, for tolerating such price destruction process, such should be a disgrace for PSE regulators—the SEC and BSP.
Corrupt means leads to corrupt ends.
Nonetheless, since all actions have consequences, purposive distortions of the economic and market process will have its due…quite soon enough
Yet in the fullness of time, people will likely blame the markets rather than the institutional leadership for the latter’s misguided and depraved actions. And this would be unfair
With epic history is in the making, it is the future, and not the present glorification of bubbles, that will pass judgments on present activities.
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