Industrial Sector Firms Barely Joined the Pump to PSEi 7,800-7,900

Like the property sector, the industrials have hardly been participants in the recent vertical price pumps on select issues that propelled the Phisix to its current 7,800-7,900 levels.

Current price dynamic represents an amalgam of the last two attempts (2015 and 2016) at 8,100.

Like 2015, only a few PSEi issues were responsible for the present buoyancy. Like 2016, aside from pumps on elite PSEi 30 issues, there had been selective participation in the broader market.

I constructed three filters to constitute as qualifiers for participant issues in the latest fastest perpendicular thrust on the PSEi 30 since 2007. (Yes current vertical price moves resonate with the August-October 2007)

-current prices for the week have to be higher than the December lows

-current prices for the week have to be at the highest level since the December lows.

-to avoid the consideration of momentary price spikes, which hardly accounts for a trend, an uptrend of at least two months

Here are charts of the 7 industrial composite issues of the PSEi 30…

 

Two main reasons for the exclusion of short-term price spikes: One it hardly constitutes a trend. Second, such steep price actions can swiftly be negated or reversed.

Food manufacturing titan URC’s shocking 11.35% crash (!) this week should serve as an example. The issue could have qualified as a participant in the SM group led PSEi pump, but this week’s crash virtually vanquished all the gains acquired since the end of March. It looks very much like Newton’s Law in action.

Opposite URC, SMC’s Petron (PCOR) rocketed by a staggering 10.89% last week! The surge brought the issue to its highest level since December. It also surged past December lows. But PCOR fails the third criteria: there has been no uptrend except for this week’s spike. And as URC has shown what goes up can come down…rapidly.

EDC could have also been a candidate, but it has failed to break free from its consolidation phase even as the PSEi surged past 7,800.

In all, ZERO, NADA, ZILCH, ZIPPO of the 7 PSEi industrial issues have demonstrated the same degree of frenetic pumping similar to the activities of its peers from the top 5. So unless there will be dramatic and drastic changes soon to reverse this, current dynamics suggest that these issues will WEIGH on any pumping motion directed at the top 10 issues.

To move on to the other 23 of the 29 members of the industrial sector index….

 

Of the 6 issues, only Alson’s Consolidated (ACR) and EEI’s steep climb has resonated with that of the PSEi’s heavyweights.

 

Of the next six issues, only Integrated Microelectronics (IMI) has partaken in the vertical rally. Note that cement manufacturer HLCM plunged due to the disappointing top and bottom line in the 1Q. Think of what this means to the much-ballyhooed infrastructure and construction boom!

 

The third set shows of a much better probability. Three issues Megawide (MWIDE), Purefoods (PF) and Phoenix (PNX) have, so far, been beneficiaries of the recent meltup.

 

And of the last four, the speculative wave has only percolated to Pryce Corporation (PPC)

Additional notes:

Among the significant industrial non-benchmark liquid issues, CIC and ANI have stirred hot whereas CHP and PIZZA have remained cold.

And yes even more intriguing has been the developing divergence in price trends between construction managers EEI and MWIDE vis-à-vis cement manufacturers HLCM and CHP. I will make a short note on the dismal 1Q performance of the cement industry next.

So, only SEVEN issues (ACR, EEI, IMI, MWIDE, PNX, PF and PPC) of the 29 composite members of the industrial sector or 24% have taken part in the recent bidding binge.

Or, such reveals of the very narrow breadth of participation of listed issues under the rubric of the industrial umbrella.

Index manipulators would have to double their time and efforts to pump and heave up the broader markets so as to fulfill their mission of breaking 8,100.

Incredible Coordinated PUMPING: SM Group Powers the Phisix to 7,850!!!

Allow me a short note on last week’s PSEi’s 2.36% rampage.

Some numbers:

Year-to-date returns zoomed to an incredible 14.64%!

The Phisix has now entrenched itself as the best performing national bourse in the Asia-Pacific region. This week’s jump widened its gap with its nearest rivals, India’s SENSEX (+12.14%) and Singapore’s STI (+12.11%).

On a monthly basis, such yield translates to a staggering 3.45% per month for the past 4.25 months! 

On an annualized basis this would imply for a whopping 41+% yield! That’s in the condition that the present price momentum will be carried over through the year.

The 64 Billion peso question: Will earnings in 2017 grow at the same pace of the current yield? 

Or will price (driven by credit expansion) only matter?

More.

On the steepness of the PSEi ascent.

The race to 7,850 from 7,400.

The 2015 antecedent took 28 days and had an average volume of Php 11.34 billion.

The 2016 predecessor took 37 days and had an average volume of Php 9.4 billion.

Today the path to 7,850 from 7,400 was completed in just 20 days with an average volume of Php 8.7 billion!

The establishment has been in state of panic to savagely FORCE up prices at the fastest pace compared to its priors! And this has occurred in the face of rapidly diminishing peso volume!

Next. How was the 2.36% attained?

Simple answer: A gargantuan pump on SM group stocks.

As I have been saying here, this is no stock market. Instead, this is a price fixing mechanism.

Once again, it’s the story of the SM group.

Three of the top 5 biggest market cap issues are from the SM Group. These three firms have a combined market cap weight of 25.48% (as of Friday’s close).

Just look at how the three performed: SMPH +8.05%, SM +6.32% and BDO +2.59.

Shocking weekly numbers to repeat: 8.05%! 6.32%! 2.59%!

Has there been any significant fundamentally earthshaking news to impel such a run for the three issues?

For the fantastic trio, the average weekly return was at 5.6% (left window)! Such outcome compares to the average return by the PSEi 30 which was only at 1.36%.

To stress further, calculated in the context of the market cap weight share shows that over sixty percent of the week’s 2.36% had emanated from advances of the fantastic trio (right window)!

Such demonstrates of the scale of the contribution of the three SM issues in this week’s run to 7,850!

The SM group -2GO deal coincided with the intense rally of the peso and the PSEi 7,400 breakout. Last week, 7,850 has clearly been a product of massive pumps in the firms owned by SM Group.

SM’s fingerprints have been all over!

Why?

If we include ALI and JGS to complete the top 5’s role, then a colossal 80% of the week’s market cap calculated gains have been from these 5 issues!!!

Again the idea here is to use mainly the SM group plus the other issues from the top 10 to generate a herding effect with the aim to push the index towards 8,000 and above

For the establishment prices are what only matters! 

It won’t be far where the PSE will be singing hosannas again!

 

This would be the first time ever for SM and subsidiary SMPH to experience such scale of vertiginous BW-SSO impulse in their long history.

And notice of the acceleration of the blowoff phases for these issues, particularly for SMPH.

Imagine, the biggest market caps experiencing blowoff phases! You’d expect to see this in third liners. Apparently, some entities have become so restless and desperate, hence the relentless and electrified price pumping!

It will be GDP week a week after this, so expect another wave of vertical pumping!

I noted in my earlier note that present scenario looks like 2015 when it comes to the disparity between the performances of the SMPH compared to its non-PSEi property peers.

 

I haven’t checked out the other industries. But I would believe that the industrials would share the features of the properties.

It has really been a combo now.

Yet the above numbers tell us that there have been pumping in the broader markets. In the property sector, I identified four.

We will see if the BW-SSO impulse in the SM Group will succeed in firing up other issues.

Market manipulators really believe that they can create something out of nothing. They probably think that record stocks amount to nirvana.

They are likely to get the nastiest surprise of their lifetime.