Gus Cosio says so

Ideas on the Philippine Stock Market

The gravy train

7;10pm  Wednesday   May 20, 2009  PSEi –  2337.6   PHP/$ 47.28

There must be some attractiveness that investors see in Philippine assets be it the currency, bonds or stocks.  Yesterday, the Power Sector Asset-Liability Management Corp. (PSALM), which manages the finances of state-run National Power Corp., floated US$ 1billion 10year bonds with a 7 3/8 coupon.  The issue was 6 times oversubscribed and the price had moved up by a point overnight.

We had a weak start this week.  The PSEi was down 29.33 points last Monday in what I thought would have been the start of some sort of market correction only to be followed by a 30.21 point gain Tuesday.  Of course a 2.8% surge in the DJIA last Monday had a strong influence in the market here.  Today, we’re up 24.18 points again, although stocks finished below their highs on profit taking similar to what happened yesterday.

Investors are picking up stocks that had reported good first quarter earnings.  While TEL was being ignored by the market in this rally, AC seems to have been a good proxy for the market’s strength.  Property counters FLI, ALI and MEG continue to lead this surge as property sales seem to be well supported by OFW buying.  GMAP and MBT were among the strong ones indicating that investors are really going for solid earnings reports.  We also saw profit taking in PNB.

I mentioned in an earlier post that we could sense a trend evolving.  Well, we’re well into that trend now.  In the U.S., it appears that risk appetite has grown.  Over here, jumping into the market does not seem so risky yet given respectable earnings in Philippine listed companies.  The nearby threat to the market is profit taking given that we’ve come a long way from with the market up at least 15% since people hopped into the current bandwagon.

There’s a lot of talk about this rally running out of steam at some point, but I don’t see those guys selling.  I think some people are trying to talk this market down because many haven’t had a chance to buy yet.

Just as there is a risk in losing money because prices tank, there is also a risk that you miss the gravy train altogether.

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May 20, 2009 - Posted by | Financial markets in Asia

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