Foreign funds’ heavy selling hurting stock market

Emeterio Sd. Perez

Emeterio Sd. Perez

IT is the Philippine Stock Exchange index (PSEi) that keeps falling and not the prices of shares in all listed companies.

As the market’s main barometer, PSEi is computed based on the performance of 30 of 253 companies although the market also has an index for each sector.

In a falling market, there are also survivors among the 30-PSEi stocks never mind if only a few of them were able and still are able to defy the effects on the market of what has been described as pork barrel scam.

Has the Janet Lim-Napoles drama adversely affected the market? The public investors who trade on listed stocks should know the answers.

Foreigners, however, react faster. Being more cautious, they get out at the first sign of an impending political crisis. Why take the risk by staying longer?

Foreign funds affect the market. When they invest, PSEi rises and when they sell, it falls. And in the second week of August, they started heading for the exit that by the end of the month, they left with more than P100 billion for some other investment products if they were not on their way to the banks.

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On August 29, PSEi plunged to 5,972.08, which, incidentally, was just 0.63 point off its close of 5,971.45 in the first week of January this year when the market was on a run. From January to July, everybody was bullish about the market.

Then came August, when PSEi was at its worst after seven months. Number 8, after all, is not a lucky number. Here are some more numbers culled from PSE’s weekly report:

• July 29-August 2 Foreign buying: P20.654 billion. Foreign selling: P19.547. Net foreign buying of P1.107 billion.

• August 5-9 Foreign buying: P11.233 billion. Foreign selling: P13.033 billion; Net foreign selling: P1.80 billion.

• August 12-16 Foreign buying: P28.066 billion. Foreign selling: P30.069 billion; Net foreign selling: P2.003 billion.

vAugust 19-23 Foreign buying P8.767 billion. Foreign selling: P15.538 billion; Net foreign selling: P6.771 billion.

August 26-30 Foreign buying: P22.717 billion. Foreign selling: P34.404 billion; Net foreign selling: P11.687 billion.

Total foreign trades in August: Foreign buying: P91.437 billion; Foreign selling: P112.591 billion. Net foreign selling: P21.154 billion.

For the first time since January, foreign selling topped monthly foreign buying by P21.154 billion in August sending PSEi below 6,000. Trading results show the downturn has no stopped yet. In the first trading day of September, PSEi closed at 6,061.8 for only 1-percent drop.

But such slight fall did not in any way suggest that foreign funds are coming back because of the total foreign transactions of P6.593 billion, P3.628 billion, or 55.028 percent represents foreign selling.

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With the incomplete audit of the utilization of the Priority Development Assistance Fund (PDAF), the market has already lost so much foreign money. Anything could still happen to the share prices not only of PSEi stocks but also of the rest of the listed companies.

The uncertainty that has hit the market would probably persist as long as PDAF issues remain unresolved, which would not be easy to happen. Hopefully, the market would normalize soon to welcome back foreign managers.

If only the Commission on Audit (COA) would also examine the use or misuse of PDAF by ALL those entitled to it, then the taxpayers would know who really are the corrupt and most corrupt among them. As it dilly-dallies in living up to its billing as a constitutionally independent commission, COA would cease to be the watchdog of public funds as its officials proclaim it is.

Only COA chairperson Ma. Gracia Pulido-Tan and Commissioners Heidi Mendoza and Rowena Guanzon, who are all Aquino appointees, know the answers.


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1 Comment

  1. COA must make sure that the taxpayers money should be accounted and check. Verification and regular auditing well tap the Government for clean and honest business dealing improve services and bring our Index prosper, as money are wisely invest and use for rigth and good project.