DEN SOMERALast week, the market slipped on investors’ concerns about rising inflation and other economics related data.On Tuesday, the government gave it latest report on the country’s inflation rate for July which further rose to 5.7 percent, topping the already five-year record high of 5.2 percent in June.Based on official records, this is the highest reading the country ever had since March 2009, or in nine years.This was also higher than the expected estimate of 5.5 percent by industry watchers. This was also almost on top end of Bangko Sentral ng Pilipinas’ (BSP) estimates of 5.1 to 5.8 percent for July.The further rise of inflation was particularly attributed to increased prices in food, fuel and transport services. The prices of heavily weighted food and non-alcoholic beverages increased year-on-year by 7.1 percent - the highest inflation rate for food since August 2014.In Metro Manila, especially, the Philippine Statistics Authority (PSA) said the following commodity groups heavily encountered higher prices: food and non-alcoholic beverages were up 7.2 percent year-on-year; alcoholic beverages and tobacco by 21.9 percent; transport by 8.9 percent; housing, water electricity, gas and other fuels by 8.2 percent; health by 4.5 percent; clothing and footwear by 2.4 percent and recreation and culture by 1.1 percent.On Thursday, the BSP came out with its strongest action, so far, to tame inflation. It raised interest rates by 50 basis points. This is now BSP’s third consecutive rate hike for the year, bringing the total increase to 100 basis points, raising the prime lending rate to four percent.When the general public has more money to spend, it causes the economy to grow and inflation to increase. The increase in interest rate, on the other hand, would bring about a whole less disposable income to the population that would limit their consumption spending. As such, inflation may ease but the economy may slow down.Falling below market expectations, the government also reported Thursday the country’s gross domestic product (GDP) only grew by six percent in the second quarter. Socioeconomic Planning Sec. Ernesto M. Pernia pointed at three factors that mainly contributed to the slowdown. These were the closure of the world-famous tourist destination Boracay for six months, weak mining sector output, and slowdown in fisheries and agricultural sectors.In particular, Boracay’s closure reduced exports of services to 9.6 percent from 16.4 percent in the first quarter.The stricter imposition of mining regulations resulted in the closure of several mining pits. Along with the imposition of excise tax on non-metallic minerals, the sector declined by 10.9 percent in the second quarter.Lastly, the strict enforcement of fisheries laws in Laguna lake and “almost stagnant output” in the agricultural sector especially reduced food production and further dragged down the economy in the second quarter.The Philippines trailed Vietnam and China for the period with their reported growth rate of 6.8 and 6.7 percent, respectively.Pernia said the country needs to grow by at least 7.7 percent in the second semester to end the year at least a little over seven percent which is within the lower end of the government’s forecast of seven to eight percent.Week 23 overall standingsThe column for last Friday didn’t see publication because my computer was hit by a virus. The final copy of my article was erased while the draft with old news clippings in it were retained instead. I had several commitments to attend to that day and I didn’t have time to beat the last-hour deadline.Since the overall weekly results are reported every Tuesday the following week, you can see them reported now including the trading transactions made by the players during the week, as shown in the table below.Again, only two of the seven participating players did some trading (or rebalancing of their stock positions) in the hope to find the magic combination to improve their performance. These were Pixiu, the only female player, and the young investing novice, PH or Play Hard.The trading moves made by them for the week significantly improved their performance standings: Pixiu widened her lead to stay number one in the leaderboard with her investment portfolio growing 1.83 percent higher from the previous week.Play Hard, although still behind in third place, managed to card another 1.29 percent gain for a return on investment (ROI) performance of 100.98 percent for the week.His small effort the week before to rebalance his position helped Small Time Trader to improve his performance standing one notch higher in the leaderboard to overtake Dondee Prime who fell on sixth place.With one of his only two stock picks becoming a sudden market favorite, St Michael has managed to stay number four in the contest. Philex Energy Corporation, his main bet for a speculative play, continued to sizzle.With Dud67 not reacting tomarket’s shift from the third telco play to a hot oil play in West Philippine sea, his performance barely improved to a weekly gain of 0.09 percent on an ROI of 64.25 percent.HRB2015 remained in second place but his passive posture in the contest might soon drag his performance standing considering the strides made by the more active players in the game.Bottom lineCuriously tracing the monthly inflation rate of the country before the introduction of the initial package of the Tax Reform for Acceleration and Inclusion (TRAIN) law of the government’s Comprehensive Tax Reform Program, we found that in August to December 2017, they were as follows: 2.7 percent for August; 3.1 percent for September; 3.1 percent for October; 3.0 percent for November; and 2.9 percent for December.Upon the implementation of the TRAIN law in January, the inflation rate rose to 3.4 percent. This was followed by 3.8 percent in February, 4.3 percent in March, then gradually increased to 4.5 percent in April, 4.6 percent in May, to 5.2 percent in June and to the nine-year high of 5.7 percent in July.Noticeably, the market’s total value turnover slowly fell to the P6.0 to 9.0 billion mark. These got even lower at August’s onset.As of last week, daily turnover has gone down to as low as just above P5.0 billion to as high as over P8.0 billion, bringing average daily turnover for the week to P6.8 billion and the year-to-date average to P7.18 billion.Moreover, a total value turnover within the P5.0 billion mark has at times driven up the market and a P8.0 billion mark has likewise driven down the market, whether or not foreign investors were net buyers or sellers.Nevertheless, high cap stocks continue to be in the list among the top stock gainers for the week, and while the benchmark Philippine Stock Exchange index (PSEi) slightly dipped with a loss of 14.41 points or 0.18 percent last week, the All Shares index ended with a gain of 46.40 points or 0.99 percent.This seeming inconsistent but healthy trading results could only mean the market is still in for a good play. To profit more from the situation, however, it’s probably high “time to change investing strategy.”Den Somera is a licensed stockbroker. The article has been prepared for general circulation for the reading public and must not be construed as an offer, or solicitation of an offer to buy or sell any securities or financial instruments whether referred to herein or otherwise. Moreover, the public should be aware that the writer or any investing parties mentioned in the column may have a conflict of interest that could affect the objectivity of their reported or mentioned investment activity. E-mail address of the writer is den.somera@www.manilatimes.net
