Behind The New Record Phisix 8,144.91

The PSE eulogized:

The Philippine Stock Exchange index (PSEi) posted a new record high on Thursday. 

The PSEi closed at 8,144.91, up by 91.03 points or 1.13 percent from Wednesday's close. Today's closing level is the highest for the main index since April 10, 2015, when the PSEi closed at 8,127.48. Intraday, the PSEi also hit a fresh all-time intraday high of 8,169.64 surpassing the previous intraday record of 8,136.97 posted on April 7, 2015.

"The stock market's surge to a record high underpins investor confidence in the local economy and in the Philippine capital markets. The Philippines remains a favorite among emerging markets as it continues to provide attractive returns," said PSE President and CEO Ramon S. Monzon.

Year to date, the PSEi has gained 19.1 percent.

First, Asia has been experiencing a frantic race for yields. Bourses of Vietnam, Indonesia, South Korea, New Zealand, Bangladesh and India have sprinted to RECORD highs! Thailand’s SET and Taiwan’s Taiex has rocketed to 1995 and 1989 highs respectively! Bourses of Hong Kong, Australia, Malaysia, Singapore and Pakistan drifts at close to recent zeniths. The Mongolian top 20 index seems to catch up rapidly. There have only been TWO exceptions: Laos and Sri Lanka.

Like the PSEi, the MSCI Asia Index (ex-Japan) has topped its 2006/7 high

By the PSE’s logic, with the exception of the two outliers, every single bourse in Asia has been experiencing “investor confidence in the local economy and in the capital markets”. Also Asian bourses “continues to provide attractive returns” regardless of valuations.

Chasing prices from negative real rates create the aura of attractive returns. Stock markets have become gambling halls.

Next, FIVE issues contributed to nearly THREE-FOURTHs of today’s market weighted index gains. The average gain of the Phisix was only .89%.

Moreover, based on 2016 eps, the average PER for the PSEi rose 20.785. However, when calculated by the free float weighted market cap, PER vaulted to 25.52! That would be 1996 highs!

Please do notice that the highest PERs have been crammed in the top 15. The slope of PERs reveals where the concentration of pumping has taken place during the past 4 years (lower window)

Remember, the PSEi 30 1H 2017’s net income grew by less than 1%! What has zoomed in the 1H in the PSEi 30 was debt! Additionally, 1H GDP was only 6.4%!

The PSEi made a breakthrough on decaying foundations!

Market internals also shows the same symptoms.

Today’s breakout emerged with a stunningly low peso volume of only Php 8.45 billion!

When the PSEi broke the 7,400 in January 9, 2015 peso volume was Php 11.2 billion!

The past two 8,100 runs in 2015 and 2016 have eclipsed today’s slim volume by a wide margin!

Volume for the six issues accounted for 30.43% of total trades at the main board today.

The low volume, rocketing prices everywhere and negative real rates have allowed manipulators to push back sellers.

This only shows how 8,144.91 have hardly been from real market forces but from systematic engineered pumping – from the afternoon delight and marking the close.

While it may be mission accomplished for them, what comes down the pike should be very interesting.