PSEi 7,800 Falls; Defense of Maginot Line Spurred a STAGGERING .8% Marking the Close Pump!!!!!!!!!!!

Increasingly desperate times calls for increasingly desperate measures

With sustained declines, the pressure to keep the Phisix within spitting distance from the Maginot 8,000 line seems to be mounting. Since each declines translates to the widening of distance from the recent highs, then this calls for the intensifying use of marking the close to buoy the index.

 

Interestingly, the Philippine Stock Exchange was under heavy selling pressure the entire day.

Nevertheless, regular price fixing actions went in operations. An afternoon delight pump was attempted (light blue downward arrow on Bloomberg’s intraday chart) at post lunch recess.  Curiously, it was foiled.

So up to the last 2 minutes the PSEi was down by a huge 1.6% but was pumped to 1.4% about a minute (upper left) prior to the market intervention phase. A new modus has been in operation. This involves a last minute pre-market intervention pump to amplify the momentum on marking the close thrust. This looks like an abbreviated afternoon delight but implemented at the (one to two) last minute/s.

This also could have been meant to reduce the scale of marking the close.  I discovered this only last week. Perhaps a cheaper means to attain the objective.

Nevertheless, at the runoff period, the deficit of 110.11 points was chopped by an incredible 59.55 points or more than half or 54%! This sent the Phisix down by 50.56 points or .64% at the close! Juxtaposed in the above are the images of the PSEi at the market intervention phase and at the close.

As shown above, the marking the close pump of 59.55 points was even LARGER than the 50.56 points deficit at the close! That’s the magnitude of the pump used to save the 7,700-7,750 level. The PSEi hit a low of 7,719

Last week, the degree of price fixing involved an average of 22 points per session. Today this has more than doubled!

ONLY IN THE PHILIPPINES!

Again understand that to push the index requires a coordinated and synchronized pump on several market cap heavyweights—mostly from the top 10 of the index.

The effects of which can be seen first from the sectoral performance.

 

With the exception of the services, all four mainstream sectors were beneficiaries of the frantic pumping. 

Now detailed into particular issues, here are the eyepopping numbers.

Largest market cap SM soared 2.3% to end the day down by only .43%! This means SM was down by as much as 2.73% just a second prior to the intervention phase.

With Newton’s Law’s hounding JGS, the issue spiked 2%, which reduced losses to only 1.28%. This means that the pre marking the close losses totaled a considerable 3.28% for JGS!!!!

Metrobank closed down .91%. But this has been alleviated by a 1.34% pump which implied for a 2.25% deficit prior to the closing numbers!

47% of URC’s 3.83% spike was due to the 1.8% marking the close!

SMPH closed unchanged today. But it was down by 1.4%, a second prior to the transition to the runoff period!

Shocking numbers all intended to pump the index

What couldn’t be done in regular session had to be manipulated at the close!

All actions have consequences. Not only has these severely inflated valuations of individual issues and the index, such compounds on distortion or in the fundamental function of the stock market as a discounting mechanism through price discovery.

The end result from the above is the continuing buildup of imbalances or enlarged detachment between fundamentals and prices, and their non stock market ramifications—e.g. inflated collateral values (for credit and M&A functions) and more

Yet the greater the imbalances the larger the probability for a violent market clearing process.

In short, the obverse side of every artificial credit financed boom is a calamitous bust

Bonus chart: Will China's SSEC serve as a template for the PSEi?

Newton’s Law Reappears on Several PSEi Issues!

Down by a measly 1.08% for the week, the Phisix remains at a lofty 7,845.

But headlines don’t reveal of the real story.

There seems to be a developing divergence in price actions within the PSEi 30. 

For now, three characters of price actions can be seen: non record vertical price movements, adrift at recently established record highs from latest vertical run, and finally, the reappearance of Newton’s Third law of motion “For every action, there is an equal and opposite reaction”

The breakdown:

-An incredible 7 issues are within striking distance 5% less to new record highs.

-Two second tier issues seem as on a vertical ramp

-Finally the reappearance of Newton’s Law as seen in 7 charts below. 

Note: not all charts indicate the same degree of Newton’s law. Some have shown major symptoms, this includes JGS, URC and GLO. The minor ones are AEV, PLDT, ALI and MBT.

The jury is out as to whether these issues will be pushed up by the record drifting counterparts or if they instead will drag down the rest with them.

Surely, given the record valuation levels and the recent spate of vertical price actions, it’s easy to see how history has been unfolding.

As I recently wrote,

In short, the current vertical trend itself is structurally unsustainable.

At best, it would need to take some of the froth off through a lengthy process of consolidation. From here, fundamentals should grow more than enough to offset the recent price pumps.

At the norm, it would suffer the same Newton’s Third Law of motion dynamic as its 2013 and 2015 predecessors.

At worst, the PSE would suffer from a crash that would be more than the Newton’s law.

The reemergence of the Newton’s Law suggest that for now the PSEi may take second route. But of course, the BW-SSO final blast off phase could still be a possible option. 

Interesting.

BIS Charts Reveals that 1Q Philippine Growth Rates of Property Prices Has Fallen Back to 2010 Levels as Land Prices Go Berserk!

I recently said that schizophrenia has been afflicting property bulls. Yet more signs of trouble for them.

Despite the constant push to project a perpetual property boom and despite the massive BSP 4Q 2015 and 1Q 2016 stimulus, the Philippine property sector may have fallen into a state of exhaustion. Such comes mostly from the race to build supply and possibly also from potential demand site pullbacks (out of pricing and affordability issues)

Well the central bank of central bank, the Bank for International Settlements just released 1Q property price data for the world which includes the Philippines

 

Wow. Growth rates in Philippine real estate prices have sunk to merely 2.88% nominal in 1Q and 1.73% real! 

Real estate Makati commercial and residential prices have been in descend since its peak in 2013 (coincidental with the 10 months of 30%+++ money supply growth)! 

Growth rates have essentially retrenched to 2010 levels—the inception of the BSP fueled boom! Growth rates seem as approaching NEGATIVE zone!

 

What’s more interesting has been of the developing sharp divergence between Makati land prices which boomed 17.34% over the same period, as against condo commercial and residential prices which rates dipped to again a mere 2.88%

At the background has been the 1q boom in bank credit conditions which was manifested via M3. This means bank credit has most likely financed Makati land speculation, most likely from developers racing to build up land inventory for future development.  

The divergence implies of the softening demand by consumers in the face of developer’s constant race to build supply—the mismatch of which appears to be burgeoning!

As time flies, cracks seem to be getting bigger and bigger!