SOUND BOARD: Yay! PSEi was up but why?

1. The Philippine Stock Exchange Index (PSEi) is a capitalization-weighted index composed of stocks representative of the Industrial, Properties, Services, Holding Firms, Financial and Mining and Oil Sectors of the Philippine Stock Exchange (PSE) [Bloomberg]. It  was up on 29 May 2020 because we had a net foreign buying of 955.39 Million Pesos; that means, foreign investors were buying shares of stocks in the PSE more than they were selling, which drove the PSEi up by 4.82% or 268.62 points from 5570.22 to 5,838.84 level. The proximate cause could be that there is some level of certainty now that businesses in the Philippines will open and operate come June 01, prompting foreign investors or traders to come in.

Net foreign buying of 955.39M catapulted PSEi above its 50-day Exponential Moving Average 

2. The role of foreign investors or traders in the PSEi is important as they add volume and liquidity in an otherwise thin market; simply put, they have the money that could instantly impact the performance of the PSEi. Absent foreign investors or traders participating in the stock market, PSEi would have no momentum to rally and breakout from its resistance level as what happened to PSEi in the past two and a half months.

The encircled green long column signifies large buying volume which can be primarily attributed to net foreign buying.

3. It is actually only the second time since March 16 that we had net foreign buying. The first time was on 05 May 2020. All other days, we had net foreign selling, which suggests that foreign investors are pulling out their money from the market and placing it somewhere else. If we "follow the money" as the saying goes, we will probably end up in the global market where there is volume and liquidity. That's why some popular traders or investors have also focused their attention to the global market. I just follow suit and am starting to learn more about trading and investing in the US stock market for diversification.  Of course, it is always recommended to invest or trade in our own stock market to help our economy recover or grow faster.

SOUND BOARD: What to expect because of the MSCI rebalancing

Image courtesy of https://fee.org/articles/the-law-of-supply-and-demand/

Expect the price of $PGOLD to go up and expect the price of $SECB to go down.

This is because fund managers who track the MSCI as its benchmark and mimic MSCI's basket of stocks will have to remove $SECB in their portfolio by selling $SECB, thereby driving the stock price of $SECB down. Supply up + demand down -> Prices down.

On the other hand, fund managers will update their portfolio by buying $PGOLD thereby driving the stock price of $PGOLD up. Demand up + supply down -> Prices up.

The Law of Supply and Demand in play! 

$PGOLD is expected to go up

When the news broke out that $SECB will be removed, its stock price immediately went down. 
You could see a gap.

[Note: This post may need prior knowledge on what happened in MSCI rebalancing. You may read it @ https://business.inquirer.net/297215/psei-loses-0-45-in-thin-trade]

SOUND BOARD: Effects of ABS-CBN shutdown on other businesses

[This is raw]

70 Congressmen killed the franchise of ABS-CBN, the Philippines' largest network, because of their own personal vendetta against ABS-CBN. They put their personal interest first, ahead of  the interest of the Filipino people, their constituents. 

Instead of helping each and every Filipino and business to survive the crisis brought by COVID-19, the Congressmen chose to put an end to ABS-CBN's franchise at the expense of a lot of employees and other businesses. 

Effects:

- 11,000 people lost their jobs.

- Advertising companies lost their clients after losing half of the audience in TV market. See https://business.inquirer.net/296787/ad-companies-feel-impact-of-network-shutdown

- Investors lost confidence in the Philippines, seeing how the government can adversely affect the operations of businesses without regard to due process of law. See https://www.bworldonline.com/forced-closure-of-abs-cbn-may-hurt-investor-confidence/

- Domino Effect on other industries rendering services to ABS-CBN. See 

https://www.rappler.com/voices/thought-leaders/analysis-how-abs-cbn-exit-will-hurt-philippine-economy

- Research firm lost biggest client, ABS-CBN. See https://business.inquirer.net/306434/abs-cbn-shutdown-aftermath-research-firm-ad-agencies-also-cutting-jobs

- Less exposure of sports events. See https://cnnphilippines.com/sports/2020/7/17/ABS-CBN-Sports-retrenchment.html?fbclid=IwAR3Geb4kl6m-OyTIk8aFzmXM0V_Uj63X3xdezK-XtQLdc5XdzWfPUarGIWA

Given the adverse effects of the ABS-CBN shutdown to a lot of people, I can't help but think if the 70 Congressmen have conscience. 

This is indeed a very very sad episode in the history of the Philippines. 😞😢😟