With the way the Phisix has spiraled to the roof from the year’s start, one would bear the impression that the Phisix actually delivered robust earnings for the first semester.
Well, such impressions can be construed as popular delusions.
Why? Because NET income of the PSEi 30 actually grew by FIFTEENTH of one percent (.15%) in 1H 2017! Not 15%, but .15%! Yes, that would be CLOSE to ZERO, in short!
Let me discuss this soon.
Wild pumping typically characterizes the GDP week, as I earlier wrote.
Well, the same phenomenon has appeared for three successive sessions for this GDP week where the Phisix catapulted by 1.48%!
As a side note, 2Q GDP will be announced tomorrow. International media quoted an official who suggested that it will be better than the 1Q. And with the absence of revisions, the public will most likely hear what they want to hear.
GDP week pumps have not just been wild these have been orchestrated and coordinated.
As in the case of the last two days, almost like clockwork, the Phisix rose immediately at the resumption of the post-lunchbreak session or the afternoon delight.
Because actions of the Phisix have been heavily tilted to the top 10 issues, synchronized pumps have been concentrated to them. However, today’s afternoon pump transformed into an end session dump! (see left)
Funny but people actually expect NEW Record HIGHS from stocks in the face of ZERO net income growth! Yet more evidence that prices have become detached from values.
And more. The BSP came to rescue the peso today.
The USD peso opened at 51.45 and subsequently rocketed to a high of 51.61! However by late morning, the peso suddenly rallied sharply or the USD just collapsed!
Such moves have typically been associated with BSP activities. The USD Peso ended the day at 51.35 – little change from yesterday’s 51.34.
Perhaps June remittance growth numbers, for the BSP, would have snuffed out some of the pesos’ weakness. Instead, the cascading peso accelerated. And hefty interventions from the BSP were required to disrupt such momentum.
Nevertheless, regardless of the tomorrow’s GDP results, micro data tells us that the cement industry suffered a thud in the 2Q!
Of the three producers that reported, cement revenues cratered 13.61% in the 2Q and 10.99% in the 1H!
Holcim, the largest producer, crashed by 20.84% and by 16.74% over the same period. Cemex tumbled 11.94% and 13.59%. Lastly, Eagle Cement, which sales posted a huge 19% 1Q jump, saw a sharp deceleration to 5.63% in the 2Q.
Of the three producers, HLCM has a 48.5% share of revenues while Cemex has 30.64% and Eagle 20.85%.
In the meantime, Aboitiz Equity Ventures reported in their 2Q 17Q: “Republic Cement and Building Materials, Inc. (Republic) posted an income contribution of ₱494 million for 1H2017, down 43% from previous year's ₱869 million. Cement demand slowed down in the first half of 2017 compared to the same period in 2016 when demand picked up due to the election season”
Though Eagle did snare some market share away from its larger competitors, the industry suffered from a severe slowdown as evidenced by the substantial decline in aggregate revenues.
And given that the cement industry has been attached mainly to the real estate and to infrastructure industry, such significant deficits haven’t been signs of growth but of economic strains.
But then again, GDP is a government construct.
And more. While the PSA’s construction material price data (Wholesale and Retail) registered modest improvements in July, cement has hardly been a part of it: “Annual declines were still registered in the indices of cement at -3.2 percent”
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