The year-to-date performance of our stock market has been not as encouraging as expected. Truth is, it has been going down since it peaked sometime in April. We are much lower from our short-term moving averages, MACD still points to a downward trend while RSI is also weak albeit some recent recovery.
We are tiptoeing a crucial 7500 levels and who knows where we’ll be if 7500 does not hold. The general global economic condition as well as the economic state of our beloved country has not been too favorable as well. Some probable reasons pointed out by analysts for the lackluster performance of PSEi are as follows:
- Weak 1Q GDP results of PH. Market and analysts were expecting a much higher growth figure
- Weak 1Q corporate results. Same thing, lower than expected
- Continued net foreign selling. Dubbed as smart money, foreign funds have been letting go of our stocks for something else somewhere else. Why o why?
- Politicking ahead of 2016 Presidential elections. Expect this to get worse in the months to come. Questions are, (1) will government still be able to push for economic growth this year amidst all the election circus; (2) will there be continuity, whoever runs and wins in 2016?
- US and its telenovela Fed meetings on when they shall increase rates. We’ve been expecting this since 2 years ago and yet, Fed rates have yet to take off
- Jittery PH-China-Rest of Asean (+ US and Japan) relations due to territorial disputes
- A black swan event perhaps such as, God forbid, a mega Manila earthquake, especially since our neighboring countries have been experiencing tremors the past few months
- Greece and its debt negotiations with EU
Who know’s where the market is headed? If I did, I wouldn’t be suffering losses with my investments, right?
Those who have cut loss rates (e.g. -8%) might have hit this by now, so the question is if they followed their trading rule on cutting losses and were able to get out, sitting on their cash positions; or they were too emotional to let go, hence in a deeper bleeding hole.
Those who still have cash bullets, I suggest you hold your fire, stay put and wait for better signals.
Those who are in a regular investment plan, then just keep it. I assume your objective for opening such is long term, hence this downtrend is actually a chance to average down.
Prepare a list of stocks that may benefit from the upcoming elections. Historical elections will tell you this. Maybe stocks on media and consumer goods? But don’t buy in yet. Monitor these closely.
Sit tight. Keep watch. Pray. Winter is coming.