Gus Cosio says so

Ideas on the Philippine Stock Market

Numbers add up

8:00 pm   Wednesday   May 27, 2009  PSEi  closed at 2356.38 (up 2.02%)

The Philippine stock market had one of its strongest days again, surging 46 points.  Everything was up today, but the final acceleration of the index was on account of BDO and SM which was bought up in a big way just a few minutes before the close.  All the stocks we like are doing well. (Actually, even the stocks I don’t like are doing well.)  You can’t argue with a bull market.

When we look at regional markets, we’ll be wowed by what happened in Hong Kong.  The Hang Seng zoomed 5.3% hitting an 8-month high led by banks and refiners.  The Hong Kong market is moving even ahead of Shanghai which also rose today but only by 1.71%.

Undoubtedly, the sentiment for equites is bullish.  Those who doubt the sustainability of this rally in Asia keeps harping on the economic situation in the U.S.  Hey, if the Americans are not worried about their situation, why should we?  After all, there is enough critical mass in Asia given the size of the markets in Greater  China, India and the Asean.  Together, this is a market of close to 3 billion people.  If you extrapolate the high income segment which would be the upper 30% of the market whose disposable income is similar to that of the OECD countries, you have close to a billion people.  This market can exist without the U.S.

In my view, the U.S. would be less important in the next global equity rally.  Toxic assets will put a drag on whatever values you try to extract there.  The real values will be seen in this hemisphere.  Capacity is continuously being built in China and India.  The Asean countries, Korea and Taiwan are trying to keep in lockstep.  Regional trade was developing during this decade; it will likely accelerate in the years to come as Asians unveil their market to each other.

When the tide rises, all the boats are lifted.  I am pleased that my money is in the market.  This rally is only 2 months old.  Most investors only came on board in May.  The stronger legs of this trend have just stood up.  We should have some ways to go in Philippine stocks because of one good reason:  some of these strong companies are still cheap.

With the amount of money going around, fair value will be discovered.  Right now, many are still prospecting.  I would suggest just going for the headliners because those are what the big money will go for.  It’s the big money that will support this trend.  It always does.

P.S. This blog can also be accessed at condron.us

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May 27, 2009 - Posted by | Financial markets in Asia

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