Gus Cosio says so

Ideas on the Philippine Stock Market

We need a hero!

8:00pm   Wednesday     1 July 2009   PSEi  –   2432.89 (-0.21%)    PHP/$  –   48.13

As I look at some of global economic news, I find that signs of recovery are showing up in both Western and Eastern Europe.  Not that we are seeing robust growth showing up, it is just that the decline have consistently moved shallower over the last 3 months.  It seems that the U.S. is no longer alone in coming out of recession among the major economies.

In East Asia, while the business sentiment has not yet become upbeat, the Tankan survey indicates that Japanese businessmen believe that the worst is behind them.  In China, moves to stimulate its economy is being met with favorable response from the domestic manufacturing sector reflected by steady rises in its purchasing managers index.  Indonesia also appears to be in good shape as its strong equity market reveals that investors are looking forward to growth emerging soon.

What all these tell us is that the strength of the region’s equity markets in the past few months had accurately predicted the region’s economic recovery.

In the Philippines, we’ve also had a strong market although confirmation of growth from economic indicators have not yet emerged.  I think this is why we will continue to see Philippine stocks move sideways or even lower in the next few weeks.  I am looking for another 80 to 100 points to be taken off the index, roughly a 4 to5 percent decline.  Some stocks such as BPI, MBT, PNB, FLI, MEG, AC and ALI have either touched or penetrated their 60-day weighted moving average curve.  What it means is that the uptrend of these stocks have been already broken or just about to be broken.  What is encouraging, though, is the resiliency of the top telcos TEL and GLO because of strong support from a new wave of buyers.

The game is definitely shifting because investors are thinking of what to do next.  There are no obvious moves that are being telegraphed by the market in the past 3 days.  I prefer to take my cue from the dismal value turnover today.  This is saying to me that players were not willing to take risks today.  If that is the case, I would not want to be a hero.  I won’t increase my risk position ahead of everybody else.  I will choose a right time to stick my neck and money out.

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July 1, 2009 - Posted by | Financial markets in Asia

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