Stock market sheds off a third of its value in 2000

The Philippine Stock Exchange (PSE) shed off 30.3 percent or nearly a third of its value for the year 2000, ending at below the psychological barrier of 1,500 points as an insider trading scandal, the war in Mindanao and the impeachment trial took their toll on the market.

The Phisix ended the year at 1,494.6 points on the last trading day (Dec. 29) compared with its year-ago level of 2,142.97 points to emerge as the worst performing stock market in Asia.

Confidence in the Philippine market has been at an all-time low starting with the BW Resources trading scandal that saw a speculative stock surge in value ahead of San Miguel Corp. and afterwards crashing down leaving in its wake investors badly burned.

That BW trading scandal is now threatening the Estrada presidency as forms part of one of four articles of impeachment levelled against the President. The scandal nearly brought about the collapse of the market, according to former Securities and Exchange Commission Chairman Perfecto C. Yasay.

As a result of the poor performance of the stock market, the equity funds fared poorly from among 19 mutual funds tracked by the PSE.

Based on the valuation of returns on investments among the country’s 19 mutual funds, the equity funds – or those invested solely in the stock market – posted negative yields, ranging from a loss of 9.45 percent to as high as 32.86 percent on a year-to-date basis ending Dec. 28, 2000.

A mutual fund is a pool of money from individuals or a group of investors handled by a professional manager for the purpose of investing in a diversified portfolio of stocks, bonds or other securities that would give the highest returns for these placements.

Mutual funds are classified in three distinct types: the equity funds or those invested in the stock market: the bond or fixed income funds which are stashed in the safe haven of government securities or corporate bonds; and the balanced fund, a combination of both equity and fixed income.

Although the equity funds have the highest potential for growth, like high-flying stocks in a bull market, they are also exposed to higher risks and income volatility, which make the bond funds a safer option although they carry lower returns.

Of the 19 mutual funds most are subsidiaries or affiliates of top financial institutions such as the Government Service Insurance System, Philamlife, AllAsia Capital and Sun Life of Canada.

The country’s equity funds are Abacus Growth Fund, Filipino Fund, Philam Strategic Growth Fund, Sun Life Prosperity, Philippine Equity Fund and Philequity Fund, the only one that was able to post a positive yield of 6.39 percent so far this year.