The PSEi finished at 8,497.74, up by 49.80 points or 0.6 percent, surpassing the October 13 record close of 8,447.94. Intraday, the main index breached the 8,500 mark and climbed to a new all-time intraday high of 8,586.73.
Year-to-date, the PSEi has already registered new record highs for a total of 10 times.
"The record highs reached in yesterday's U.S. markets coupled with the liquidity generated from a recent tender offer and hopeful optimism on third quarter corporate earnings continue to generate upbeat sentiment among investors," said PSE President and CEO Ramon S. Monzon.
Since the start of the year, the PSEi has risen 24.2 percent.
I’m not here to discuss the post hoc rationalizations.
Nevertheless, these are factors that haven’t been mentioned by the PSE.
The Phisix opened with a frenzied early morning pump, which was directed at mostly at the Sy group, Ayala Corp and Ayala Land and much of the broader index.
When the post-lunch break session resumed, an acceleration of the frenetic bidding occurred. And that was the period when the 8,586.73 was reached (or up by a staggering +1.63%)!
At the last second before the market intervention phase, the headline index remained with a 106.52 points advance - still a hefty 1.26% gain. Then 56.32 points advance was shaved at the closing bell. Or, the PSEi’s gain had almost been halved! The culprits for the magical drop: Ayala Land -2.07%, SMPH -1.6%, BDO -1.44%, ICT -1.43% JFC -1.2% and TEL -.8%
Moreover, gains again were concentrated anew on the Sy Group and Ayala Corp, but this time had flanking support from JGS, TEL, MBT and SECB. BDO had big gains throughout the day only to vanish because of the YYYUUUGGGEEE DUMP!
From the chart perspective, this time is DIFFERENT for the SY Group and the Ayala Corp!
Price actions clearly point to the late stages of the BW-SSO or a terminal blowoff phase.
This shows how dysfunctional the PSEi has become. It has metastasized into a Sodom and Gomorrah market!
Now to the Peak Auto sales.
I intended to show the latest auto sales data last night. However, only one article reported on this. To have a better perspective of the facts, its presentation, and the prevailing sentiment, I was hoping to see more media reports.
Surprisingly, after over 24 hours of wait, only two media outlets reported on the September auto sales.
Though it would have been typical for media to scurry over the airing of fresh news, it just didn’t happen this time. Could it be because the September auto sales lacked the anticipated zest?
Media appears to be plagued by split personalities.
Now to the facts.
From the PNA:
Sales of automotive vehicles in the country reached 34,445 units year-on-year in September this year, up 9.5 percent from 31,451 units in September 2016, the joint report of Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association (TMA) showedMonday.
Compared to August sales, industry sales declined by 2.4 percent from 35,309 units sold in August.
The substantial deceleration in auto sales growth (in % of units) has persisted for over a year. The declining trend of the BSP’s consumer car loans has supported the slowdown in sales growth. (top chart).
The downtrend covers not only % growth but also nominal or gross units. And if the current sales trend persists, then we could be looking at a critical plateau.
Car sales are affected by diminishing returns too. Other economic factors, such as low-income/profit growth, lack of jobs from inadequate investments, inflation and more, may be involved.
The sales slowdown has been apparent whether on a quarterly basis or from a 9-month performance (top chart)
Auto sales and money supply growth, which in the recent past had tight correlations, appears to have been broken. (middle chart)
One way to look at this could be that the BSP’s subsidy to car financed sale continues to lose efficacy. Not everyone benefits from the flooding of money into the system
However, despite the sharp deceleration in sales, the output from auto production has been greater. (lowest chart) Sales grew year-on-year by 8.74% in August and 9.52% in September, however, car production expanded by 15.4% in August. Production was almost twice the rate sales.
The significant percentage of output growth underscores the manufacturer’s belief that the slowdown in sales has been temporary. If the belief is mistaken, inventory buildup would mount, which means future production output will slow.
Auto production has cushioned the manufacturing sector from falling into a contraction in the 3Q. [Sorry Folks, Manufacturing Growth Tumbled in the 3Q… (The Revenge of Economics II) October 16, 2017}
Nonetheless, even as real economy strains spread and escalate, the domestic equity benchmark index rages from the BSP’s emergency policies (QE and ZIRP) and from price-fixing artifices.
The Wile E. Coyote moment seems as lurking around the corner.
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