A Time for Recalibration and Portfolio Adjustment

 

Today's trading session continued the downward trend that started on July 6 and continued almost unabated thereafter except yesterday (June 22). There is a clear negative sentiment among the investors this month, as evidenced in very low Gainer-Loser Ratio (GLR), which reached its lowest this month at 0.24 today. Evidently, the Friday Factor added to the weighing down effect on the prices today.

Stock analysts tended to blame this decline on Covid-19 factors, from lockdowns to new variants. However, a deeper analysis of evidence indicates that this negative investor interest to load up stocks this month can be reasonably attributed to a growing lack of confidence in the government handling of the vaccination program in the country in an environment of caution brought about by the uncertainties in next year's national elections. 

In the vaccination issue, the Filipinos know that the Department of Health is not providing the public honest accounts on the safety dimension of the vaccines, which are being rolled out in the country under the Emergency Use premise. Such selective communication is understandable because of its drive to increase vaccination rates, particularly among locked out communities. However, the low turnout for vaccination indicates these looming doubts, if not fear. In its last announcement, only five million Filipinos has been vaccinated in the country's estimated population of over 111 million, or a vaccination rate of 4.5%, which also reflects the Filipinos' confidence rate on the idea of Covid-19 vaccination.

In the political front, the prospect of another Duterte presidency appears to be weighing down on the investors, particularly at sight of the present state of the Philippine economy. This is despite the continued high rates of confidence to the present Duterte presidency in surveys. This uncertainty increases as the opposition remains unable to field a strong presidential contender with a senatorial slate that are dependable at pursuing the interests of the Filipino people over their political interests.

Best Time to Recalibrate and Adjust Holdings Portfolio

However, the 12-day decline in the PSE Index, which lost more than 400 points since June 6, provides a valuable opportunity to adjust the portfolio in line with this month's low price valuations in the Philippine stock market. A trader's ability to profit small to unload stocks and buy back at lower prices is a highly valuable skill during this period. 

The good news is, the bottom is not yet in sight.  Thus, it is still possible to reduce stocks bought at more expensive prices and replace it later at cheaper prices. Next week will be something to look forward to.

The price surge yesterday, which demonstrated a strong investor participation for its GLR of 2.43. This indicates that Philippine investors still has the money making power to drive the market upward should they choose. This also means that the current decline can reverse anytime next week depending on how low the bottom of the downtrend will be. Moreover, the negative change Thursday pattern pervasive in the last two months has finally reversed yesterday into a positive change.

In effect, it is a waiting game for buyers who prefers to buy at bottom prices and drive the market back upside. While foreign direct investors can help a lot in pushing the market upward, the local investors are as capable in doing so.