As expected, the simmering price instability has found an exit valve. And venting these had emerged in the form of a BW-SSO impulse.
All it took was a one-day smackdown in SM three weeks back. And this became a queue or a springboard for this week’s two-day bidding rampage.
It would be insufficient to say that this meltup has been about euphoria or mania. The reason is that the PSE has been mainly about domestic banks, the buyside and sellside industries. That’s aside from the foreign counterparts. Retail participants have hardly been a factor. Yes even among retail accounts, many are from these industries.
Those afternoon delights combined by totally wild mark on close orders (marking the close) have, in reality, been a setup for this.
As one would see above, SM has led the PSEi with a fantastic total vertical climb!
SM carved a new record not only in prices but more importantly in the speed and intensity of price inflation.
It has raced by a breathtaking 23.21% in just 19 days (1.22% a day)! Considering that SM has yielded 12.6% year to date, common sense tells us that whatever expected profits for the year have already been more than covered by the run. SM has reported an increase of only 8% earnings last year. So current frenzied bids only compound on the price multiple expansion which makes the firm priced for perfection!
But who cares? The only thing that matters are prices.
And since balance sheets of the finance and non-bank finance industries have been stuffed with equities and given the deficiency in returns, thus returns MUST be created!
And with increasing the fragility of the system, with even more signs of excess capacity in the face of rising real economy prices, earnings are at risk! So the need to embellish the risks by forcibly pumping or the BW-SSO syndrome.
Artificial prices. Phony returns. Puffed up statistics. Inflated egos.
Price charts of ICT, AC, BPI and even the laggard MBT has been forced upwards! It’s a coordinated pump.
Many others mostly from the top 15 biggest market cap, e.g. SMPH, ALI, JGS, URC, JFC and TEL have shared the same impulses.
This is not a normally functioning stock market. Instead, this has morphed into a price fixing mechanism. And like typical price controls, imbalances accumulate. Hence this translates to mounting systemic risks largely unnoticed by the establishment.
Oh by the way, because I had to do taxes, last Monday, I casually visited two shopping malls.
One is the newly opened Ayala Mall The 30th in Ortigas. It has a relatively impressive take-up rate for a new mall (compared to the others). But since it’s new, I’d give it the benefit of the doubt.
Then I visited Ortigas’ Estancia Mall at the Capital Commons…
That’s blocks of vacant spaces! There’s even more but vacancies were fragmentedly spread throughout.
Wonder why the need to pump the index up???????
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