Mad World: While The Phisix Was Pumped 25.11% in 2017, Net Income Growth was a Measly 4.22% (Aggregate) or 7.5% (Market Cap Weighted)!

Mad World: While The Phisix Was Pumped 25.11% in 2017, Net Income Growth was a Measly 4.22% (Aggregate) or 7.5% (Market Cap Weighted)!

The Phisix tumbled to a low of 3.3% on Thursday but rallied back to close 1.42%, here is how the Bloomberg described the events:

The gauge has lost more than 10 percent this year as mounting inflation pressure and concern the economy is overheating spur speculation the central bank will need to tighten more aggressively than previously thought. The peso, Asia’s worst-performing currency this year, is also worrying investors.

“Investors are having a hard time justifying the Philippine market’s valuation,” said Lexter Azurin, a senior analyst at AB Capital Securities Inc. in Manila. “A lot of analysts are saying the Philippine central bank is already behind the curve.”

 

The amazing fixation by the public on short-term concerns in the context of reasoning from price changes or rationalizing the ticker tape by experts has been showcased by the narrative

Inflation, weak peso and nosebleed valuations were present last year through January 2018. But that didn’t stop the frantic pumps to vault the Phisix to reach 9,058.62 (January 29, 2018) and for 2017 returns to register a staggering 25.11%!

The Phisix lost 2.19% this week which dragged year-to-date return to -9.72%. Meanwhile, the USD peso inched up .28% to gradually pull away from the PSEi 30 with a +4.34% year-to-date return.

And by the way, the Phisix would have been sharply lower had it not been from those end session pumps which tallied an aggregate .77%  this week

An even more astonishing spectacle has been the fierce rescue operations on the Phisix last Thursday (leftmost window). As noted by the Bloomberg article, the Phisix cratered to a 3.3% loss (until about 2:30 pm). And in a shocking 10-minute frantic coordinated price pumping, the Phisix was suddenly down by only about .4%!

2.9% of losses wiped off in just 10 minutes! Just awesome.

Again, the synchronized panic buying began with SM, AC, and BPI then spread other key issues. Nevertheless, the rescue mission faltered, perhaps their ammo was spent, and the Phisix dropped back to register a -1.42% at the close.

Systematic manipulation sent the Phisix up to 9,058.62, yet no one in media ever talks about it. It’s like a code of deafening silence.

And one primary reason behind “a hard time justifying the Philippine market’s valuation” has been precisely from such unbridled price fixing.

Yet, was last year’s fantastic 25.11% return been about the much ballyhooed G-R-O-W-T-H?

The answer is NO.

Aggregate net income growth for 29 PSEi composite members recorded only a PALTRY 4.22%!!! That’s a tinge above the National Government’s headline CPI of 3.2% for 2017.

And that’s even without AGI which has yet to report its 17-A. AGI’s 9-month performance was down 12.5% YOY. So AGI could be more of a drag to net income growth rather than a boost.

Applying the end of the year market cap share of the PSEi members, net income growth rose by a measly 7.5%!

Yes, the establishment paid 2.35 times last year’s net income growth!

That’s how insane the market was!

And the underperformance of the PSEi has not been limited to a few issues.

Eight issues reported negative growth. Nine issues had positive but less than 10% growth.

Only 12 issues buoyed the index with 10% and more growth!

And some issues which posted big gains came from non-recurring items

You see, grand delusions have been embraced as conventional wisdom. To be in, one would need to share in such lies. On the other hand, pointing to the harsh reality is considered a pariah.

Sure there is an aspect of growth.

Let me guess, aggregate debt for the PSEi 30 grew much larger than the Php 23.24 billion net income growth in 2017!

And the establishment thinks that overpaying immensely for securities and price fixing manipulations have no untoward consequences and can go on forever???

And this is called macro stability or robust macro fundamentals???

Well, thanks to the BSP's emergency policies for these.