Gus Cosio says so

Ideas on the Philippine Stock Market

Investing in the Philippine stock market – The trend is your friend

9 a.m. Friday  Manila time May 8, 2009

Wall Street was down overnight, a 102 point retreat in the Dow (DJIA). The highlight of events in New York was the results of bank “stress tests” which involved more than 150 regulatory officials poring over the books of the 19 largest financial firms in the U.S.  The way it looks, 10 of the 19 will be needing additional capital. These are American household names such as Bank of America, Citigroup, Wells Fargo, GMAC and Morgan Stanley.

Why is this significant for us here in the Philippines?

Remember the saying that money makes the wrold go round.  Well, money had in fact been going around the world financing trade and investments and these were the guys who had been bankrolling most of it in the last few decades. If you’ve been following the country’s economic figures over the last few months, you would have seen that trade, both imports and exports have been down 30 to 40 percent.  Of course much of this has been due to lower consumption by the American consumer, but if you read further, it’s also because their friendly neighborhood banks have stopped granting them loans on their houses and their credit cards.  Unless the banks see more improvement in their financial conditions, it is likely that the world will see less of their money going around.  Banks would just keep the cash in their vaults to protect themselves from adverse or worsening economic conditions.

So today, I’m looking for a pull back in the Philippine stock market as well.  Bear in mind though that I believe that we have seen a trend started.  Any pull back is an opportunity to find bargains and buy them.  I read an analyst comment that ” you don’t bet against the ultimate player in the market, which is the Fed and the Treasury,” he says. “They have a potentially unlimited time horizon and a potentially unlimited balance sheet and have shown they’re going to do whatever it takes to get us through this period and they’re going to err on the side of overkill.”

Hey, if you’ve got the bank roller of global finance on your side, shouldn’t you take bolder moves.

Happy trading!

10:20 a.m. update

The PSE index opened 10 points lower.  It went down 33 points earlier and is now down 31.  I wouldn’t fret in this market.  It’s an opportunity to buy the real steady ones like Manila Water (MWC), Aboitiz Power (AP) which is down a lot, PLDT (TEL), and metrobank (MBT).  If you look at recovery stocks such as PNB, Pepsi (PIP), Energy Development Corp. (EDC), they are down only slightly with traces of buying in this pull back.

12 noon update

Wow, the market is about to close and what a recovery we had in prices. After the 33 point decline I mentioned earlier, the market simply picked up the same strong issues at cheaper prices.  At the close, most prices are back from yesterday’s close and some like MBT and PNB are even higher.  Talk about buying the dips, this trend is well on its way.

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May 8, 2009 - Posted by | Financial markets in Asia

7 Comments »

  1. Hi Pop! I’m gonna make it official that I am the first to comment on your new blog.

    Comment by Lorenzo | May 8, 2009 | Reply

    • actually, a friend already commented on the same article on Facebook, but it’s the thought that counts. Also, if you call me pop on your comments, the whole world will know that yours may be a biased opinion.

      Comment by Gus Cosio | May 8, 2009 | Reply

  2. great..will follow this blog daily

    Comment by GG Zulueta | May 9, 2009 | Reply

  3. full support to you, dear friend.. will make reading this blog a daily habit.. cheers ü..

    Comment by Jun Sison | May 13, 2009 | Reply

    • Jun, if you agree or disagree with my views, please comment anyway. God bless.

      Comment by Gus Cosio | May 14, 2009 | Reply

  4. Great start. Hope to keep reading you into 2012 at least. We’ll see. Blogs are like making babies…making one is easy, nurturing it is hard, growing it is hardest. Hope you fill some void after Ron Nathan left (that and Citisec reports). There’s not much commentary about the Philippine markets, less so about fiscal and monetary policy. BTW, please do consider Twitter. Just Tweet on Philippine markets. Like Paul Kedrosky (http://paul.kedrosky.com/ and http://twitter.com/pkedrosky) Blogs are so 2005. And while you’re at it, start a LinkedIn group and a Facebook fan page on Phil markets. I checked…there ain’t none. Yet. 😉

    Comment by Marc Ira | May 13, 2009 | Reply

    • Hi Marc. Thanks for your comments. My goal is to have thi blog running forever. I’ve made a link to Facebook but that does not look seamless to me. It comes in as notes. I’d be happy to link on twitter but I’m not on twitter. I’m in LinkedIn, so I’d like to know how to link there. Tell me more of your thoughts. I appreciate it.

      Comment by Gus Cosio | May 14, 2009 | Reply


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