Chart of the Day: PSE October Gross Trading Volume Plummets to 2011 Level!

 Chart of the Day: PSE October Gross Trading Volume Plummets to 2011 Level! 

 

Before proceeding to the "chart of the day," here is a summary of the events last October at the PSE. 

 

Higher in three of the four weeks, the main benchmark index, the PSEi 30, posted an impressive 7.18% return in October, the second-highest monthly return since August 2021's 9.33%. 

 

But the intense reaction signifies a recoil from the 12.8% rout last September.  The index was also down by 9.2% in July 2021. 

  

The thing is, massive selloffs that result in oversold conditions have resulted in violent melt-ups. 

 

But even among members of the PSEi 30, there was barely support from the majority.   

 

Instead, the substantial gains of a few of the biggest market cap issues delivered this outcome.  

 

Increases in the free float market cap were most evident in SM, BDO, and ALI; their returns were up 13.1%, 14.2%, and 11.6%, respectively. 

 

And part of October's returns represented many of the mark-the-close pumps.  

 

Yet, even the PSE universe suffered a selloff amidst the index's dead cat's bounce.  Aggregate decliners outclassed advancers 1,847 to 1,710. 

 

The crux of October's activity is the shocking plunge (58.2% YoY and 32.7% MoM) in gross volume to Php 90.243 billion, which fell to the 2011 level! 

 

The sharp shrinkage in volume is likely a manifestation of escalating liquidity shortfall from the sustained drain in savings.  

 

Ironically, this is happening despite the sharp uptick in bank credit growth. 

 

The rapidly thinning turnover makes the equity market highly susceptible to dramatic liquidations or distress selling for funding purposes.