Gus Cosio says so

Ideas on the Philippine Stock Market

A bumpy ride ahead?

9:30 a.m. Tuesday, May 12, 2009

We are seeing the rally in Wall Street stall.  This should bring some anxiety to investors particularly because the fundamentals in the U.S. have not yet changed.  The bears will be coming out of the woods.

Should we share the same anxiety in Manila?  Let’s take a look at the big picture.

New York’s Marketwatch reported last night that “Emerging-market equity funds saw inflows of $4 billion in the week ended May 6, the largest weekly inflow since early December and the eighth largest on record, Merrill Lynch said Friday.”   It also reported that “China and India have seen their manufacturing sectors improve over the past month, thanks to ‘massive’ fiscal stimulus, especially in China, said Doug Porter, deputy chief economist at BMO Capital Markets.”  These are facts being reported which supports the idea that both money flow and fundamentals are likely to underpin the current cycle that building up in emerging markets.

Like I said yesterday, we should not throw caution to the wind.  A market trend is not one straight line.  It is the sentiment that underlies a trend.  Every now and then, it is important to gauge what the sentiments are.  We should have a better picture of what investors in the Philippines really want to do watching today’s trading flows.

Be cautious today, but keep values in mind.  Remember – price is what you pay value is what you get.

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May 12, 2009 - Posted by | Financial markets in Asia

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