Stay Safe!
Should the American economy ever achieve permanent full employment and prosperity, firms should look well to their auditors. One of the uses of depression is the exposure of what auditors fail to find. Bagehot once observed: ‘Every great crisis reveals the excessive speculations of many houses which no one before suspected—John Kenneth Galbraith, The Great Crash, 1929
May 14th: The Biggest Ever Rescue of the PSYEi 30!
Desperate times call for desperate measures.
Last Friday, May 14th, riled by the sustained selling pressures and the sluggishness of the equity markets, the cabal of index managers underwrote the biggest ever rescue of the domestic equity benchmark.
At the pre-closing intervention phase, the PSYei 30 was down by an immense 1.91%. But the scale of this deficit was not even a hurdle.
The index surged by an eye-popping 149.36 points or 2.44% upon the transition to the runoff period. The price explosion not only erased the losses but sent the index higher by .53% at the close!
Surging by 7% from the pre-closing to the close, SM, the biggest of the market cap of the PSE, posted the most gains among the 16 issues that benefited from the orchestrated pumps as well as spearheaded the reversal of the index. The holding company closed up 1.54% for the day.
Again at least sixteen of the thirty issues benefited from the institutionalized marking-the-close pumps.
The cabal ensured the monster gains of the index with end session pumps of the largest market cap issues also led by the other members of the Sy group, BDO (+2.02%), and SMPH (+2.8%), as well as JG Summit (+2.06%).
From the Inquirer “Foreign investors save the day for faltering PSEi” (May 15): The stock barometer firmed up on Friday as foreign investors picked up selected blue chip stocks, turning into net buyers after 29 consecutive sessions of dumping local equities. The Philippine Stock Exchange index (PSEi) added 32.96 points or 0.53 percent to close at 6,269.36, in line with mostly buoyant markets across the region.
Net foreign buying was P 2.041 billion that day. Special block sales totaled Php 3.079 billion mostly from the Php 2.79 billion of ACEN shares.
The aggregate foreign trade posted a net OUTFLOW of Php 712.415 million. Of the 30 issues, only 7 registered foreign buying.
No. The locals and not foreign money saved the day. Domestic institutions with access to third-party money are likely the members of this cabal.
Further, decliners led advancer by 3 to 1 (152-50). The broader market bled.
This end-session management of the index commenced in the 3Q of 2014. But still, not only struggling to survive a bear market, the PSEi 30 remains the laggard in the Asian region year-to-date.
There is little appreciation that price controls don’t work overtime.
Instead, speculative mania has embedded a sense of entitlement that free lunches are the path to prosperity. And so, the pivot to such desperate unscrupulous measures.
If institutions could "game" the markets with impunity, could their financial statements have been grounded on the same outlook/mentality?
I am supposed to show how Friday’s historic pump has affected the free float share weightings of the index. Unfortunately, the data published still is on May 12 (as of this writing).
Anyway, historian Charles P. Kindleberger once warned,
The supply of corruption increases in a procyclical way much like the supply of credit. Soon after a recession appears likely the loans to firms that were fueling their growth with credit declines as the lenders became more cautious about the indebtedness of individual borrowers and their total credit exposure. In the absence of more credit, the fraud sprouts from the woodwork like mushrooms in a soggy forest. Much of the fraudulent behavior is illegal, but some hovers on the borderline between what is legal and what is not.
The day of reckoning nears.
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