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PSE: It’s only the beginning- June 7, 2016

When the Philippine Stock Exchange (PSE) bottomed out at the election, I asked then who would take credit
Rodrigo R. Duterte or President Aquino—if the PSE index (PSEi) made an historic high before June 30. I was not being funny.
Commentary about the PSE is usually so off the mark, it is like a magician that makes you look at his right hand while the left hand is making the “magic”. It seems like every time the market goes down, it is because of the potential of the US Federal Reserve (Fed) raising its interest rates. I wrote repeatedly in 2015 that the Fed would not raise rates until the last moment—which they did—and that the increase would be so insignificant as to make little difference, which it was.
The rate hike that has been repeatedly predicted for this month has been pure fantasy. Everyone has known for months that the British would be voting on June 23 to leave the European Union. This is the most significant political event on the continent since 1966, when Charles de Gaulle pulled France out of the North Atlantic Treaty Organization. This is the most significant economic event since the introduction of the euro currency in 1999.
No one knows which way this vote is going to go or how the markets will react if the British vote to leave. For the Fed to raise rates before the vote would be the common sense equivalent of burning down your house because you don’t like your next-door neighbor.

Even a rate increase at the July Fed meeting is now a failed dream. The latest US job-creation data
released this past Friday offered the worst monthly numbers since September 2010 and came with downside revisions for April. The number of net jobs created was so bad and so below expectations—38,000 versus 164,000—that it is being blamed on climate change and Donald Trump being the Republican Party’s candidate for US president.
Meanwhile, the PSE had a great month of May with the PSEi up 3.38 percent and the All-Share Philippines Stock Exchange All Share index gaining 4.4 percent. While the “experts” were focused on the US instead of the Philippines, the property issues rose 6.47 percent, with the financial shares up 5.37 percent. Had they looked at the PSE, they might have also mentioned that on a monthly close basis, the property index is at an historic high as is the holding company index.
To the 1 million Filipino stock- market investors, good job. To my subscribers who have been buying on any pullbacks since May 13, thank you for your confidence. To those that still think the PSE is manipulated, a zero-sum game when there are the same number of losers as winners, or an “Old Boy’s Club,” you are “thinking” yourself out of great profit opportunities.
Aboitiz Equity Ventures is up 34 percent in three months. Ayala Corp. shares increased 6 percent in two weeks. Speculative gaming issue Premium Leisure Corp. gained about 10 percent on Monday. The Philippine stock market offers sensible and risk-prudent investments for the P5,000 mutual-fund buyer to the P200 million account that accumulates the blue-chip stocks and everything in between. Do yourself a financial favor; buy the PSE.


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