Gus Cosio says so

Ideas on the Philippine Stock Market

If you’re feeling fancy free…

3:00pm   Thursday  2 July 2009   PSEi  –   2438.04 (+0.21)

What can you say when there is nothing going on.  Yes, the Philippine stock index is up 5 points on a very unexciting, uninspiring day.  Stocks traded up at the open simply because Wall Street was up.  After a few minutes,  players sold the market down.  What would have been a 20 point gain was slowly whittled down to 5 and volume was again subdued.  This market is not going anywhere for the time being.

Hong Kong, China and India are all up today on encouraging recovery signs which means other markets are simply feeling the ripples of summer holiday doldrums.  As the days and economic figures go by, I believe that the Asian region will keep moving toward recovery.

Crude oil was down overnight and remains weak in Asian trade.  Generally, I believe that oil will not be declining to levels seen in early 2009  because there is not enough of this commodity anymore.  This implies that anything that has to do with energy will likely become desirable as the months and years wear on.  This is why I like SCC or Semirara Mining whose main product is coal.  Coal is still the cheapest fuel for electric power plants in the Philippines.  I am very much convinced that whatever fuel stocks that are available today, are there in finite quantities.  Both oil and coal may soften from time to time but prices cannot be sustained below these levels for very long periods.  My view, therefore, is to go long energy commodities. In the Philippine stock market, the only energy play worth looking at is SCC.  What makes buying this stock easy is the fact that it paid 6 pesos dividends for last year’s earnings.  It’s regular dividend pay out is 4 pesos.  It closed 33.50 which means that even if I hold this to April 2010, the yield would be almost 12%.  That does not sound bad at all given that Philippine bond yields are below 8% for 10 year maturities.

If the broad market remains as boring as it had been today, it will give us time to look at good buys like SCC.  Anyway, there is bound to be more bargains that will come our way in the coming days or weeks.  This is really the time when the smart money surreptitiously make its move.  One has to think out of the box from time to time, so I’ll use this period of lull to position myself for the bigger move down the road.  After all, the great investment minds did their stock picking when nobody was paying attention.  Warren Buffet had said, you don’t make money in the market by doing what is popular.

Isn’t it a great day? Yeah!

http://www.condron.us

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July 2, 2009 - Posted by | Financial markets in Asia

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