Gus Cosio says so

Ideas on the Philippine Stock Market

Is that my phone ringing?

2:20pm  Tuesday  May 26, 2009  PSEi – 2309.68 (down 24pts)   PHP/$ – 47.285

A nervous investor called me earlier today to ask if it was time to get out of the market.  I guess people would be nervous if they see the market down 35 points or 1.5% near the beginning of trading session.  I did mention earlier that it would be prudent to take some profits particularly in stocks that have had a very good run.  There were good profits to take in stocks like FLI, ALI, MEG, GLO, MBT and BPI.  All these stocks have soared since the beginning of May.  They were even much lower in the middle of March.

When I look at how trading went today, I’m not a bit nervous.  I was expecting EDC to fall off the cliff as the market weakened.  On the contrary, after some nervous selling into mid-session, a new wave of buying came in.  I saw the same strength in FPH which incidentally came into today’s lime light on account of the annual shareholders meeting of Meralco.  Both these stocks defied gravity and went the opposite way of the broad market.  PNB also saw some nervous selling only to be picked up again at 22.

What I am compelled to look at closely is TEL.  The stock has been very weak for almost 2 weeks now.  Some say that it is because investors would rather buy cyclical stocks like banks and property so they ignore this very profitable telco. I am not convinced.  If there is any single stock that I would stick my neck (money) out for in this market, it is PLDT.  I can foresee doubling of telephone usage – fixed line and wireless – in the coming months straight through the elections in may and even past that.  There will be over 500,000 people running for office for around 17,000 positions from president to municipal councilor.  Just imagine how much pre-paid cards these candidates will buy for their campaign staff, not to mention mobile internet connections they’ll subscribe to.

Perhaps, the market could pull back a little more; it may even come off by 200 points.  When that happens, remember the turtle; he doesn’t go anywhere unless he sticks his head out.  I’m not talking “irrational exhuberance” here.  I’m just saying that there are times that we just have to take the calculated risk.

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May 26, 2009 - Posted by | Financial markets in Asia

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