Stock market trend worries insiders

The Philippine Stock Market continues its unprecedented rally the past two weeks with investors buying stocks of companies even as prices maintain its increasing trend.

After hitting the 6500 points early February, the up-trend is showing a never-before-seen confidence in the history of Philippine Trading. The government has projected a 7000-mark by December 2013 and its only February and the index is almost at its borderline.

Hernan Segovia,  a local stock broker of Summit Securities based in Lapaz, Iloilo City, said that the market was down by 100 points as it opened on February 22 last week creating a worry but immediately regained to a 2.35 point deficit when it closed.

The temporary anxiety last week was caused by some speculations of a pull out by a big hedge fund in the commodity retail industry and the market correction in the US. It was the first touch down in the negative field of the Philippine stocks after a 5-day bullish trading.

Segovia however noted that there are unseen defenders of the market even in its parabolic state. A parabolic market is a market state where prospective investors buy stocks even if it is growing  scaringly expensive. In return, a sustained increasing mark is attained although the US Federal Reserve System experience points to a market crash.

Philippine investors are going gaga over the recent news of mergers among financial institutions and other companies which will solidify the base of new investments. Two weeks ago, PNB and Allied Bank finalized their P500 billion merger.

Tycoon Henry Sy Sr. is considering today an external proposal to merge his SM Development Corporation and SM Prime Holdings into a single publicly listed entity.

The family of tycoon Henry Sy Sr. is considering a proposal to consolidate property-related businesses, including residential property arm SM Development Corp. and flagship shopping mall unit SM Prime Holdings, into a single publicly listed entity. Some are even saying that the leisure estate and gaming firm Belle Corporation which the Sy’s has the majority share could be included in the merger. The combined market capitalization of the three companies may reach P466 billion pesos bigger than the P425 billion of Ayala Land Corporation, the largest property development firm in the country.

While the indicators are good and the three fundamental drivers of the market-a stronger economy, confidence with the government and the “hot money”-are solid behind the drive, Segovia explained that a market correction is almost necessary in order to preserve the steady growth and status quo. defines market correction as a price decline of at least 10% of any security of market index following a temperorary upswing in market prices.

“The people (investors) must be educated properly on the dynamics of investing in the stock market and it must be free of charge to avoid them from pouring in their money in the market carelessly thinking that it will make them instant (millionaires),”  the conservative stock broker Hernan Segovia added.

It was noted that the present bullish trend of the Philippine market is already causing a hype and panic among would-be investors in the entire archipelago. IMT


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