Gus Cosio says so

Ideas on the Philippine Stock Market

In the mood

6:45 pm   Tuesday   11 August 2009   Philippine Stock Exchange Index  2860.54 (+0.35%)

It looks to me that the market is pretty healthy at this point.  There is a good diversity of stock plays going on.  Mining plays led by Philex Mining (PX) followed by Lepanto (LC & LCB) and Manila Mining (MA & MAB); and even the speculative likes of Nihao Mineral Resources (NI) is up there with the rest.

It is the likes of AGI, PAX, IP and even URC that makes me look favorably at the further sustainability of this rally.  Investors are moving into other second line counters while not neglecting the front liners.  TEL is up there after last week’s investors briefing.  While I have some reservations on TEL at this point because of possible losses arising from the bankruptcy of Protostar Ltd., an Indian satellite company which lists PLDT as its biggest unsecured creditor with a US$ 27.5 million exposure (Reuters 7/29/09), it has gone down to oversold levels at present prices at could be seeing a bounce.

GLO is also trading cheap after investors sold it down last week.  Same goes for AC and FLI.  Actually, I like these stocks at today’s prices.  ISM slowly crept up as its affiliate WEB surged 3.3% today.  WEB has gone a long way but I think the news that it will be changing its par to Php 1.00 from .o1 has a lot to do with it.  ISM on the other hand appears to be cementing its niche in the local telco sector with good profit performance coming from a service subsidiary.

I would not want to ignore regional markets because much of local sentiment is influenced by both global trends and regional investor sentiments.  The Hang Seng has been consolidating at levels within its one month highs and is up 145 points (0.7%) today.  China, Tokyo and the rest of Asia save KL are also up today.  The mood must still be positive all around.  My guess is the mood will prevail for a couple of weeks more before people start to ask themselves where the market is going.  For me, I’ll ask the question everyday on every stock I own.  It’s the only way to gain comfort on my portfolio.

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August 11, 2009 - Posted by | Financial markets in Asia

3 Comments »

  1. Sir,

    Any explanation why the bulls seem to be snubbing FGEN? It seems cheap whether from a value or technical perspective.

    Thanks.

    Comment by Warren | August 11, 2009 | Reply

    • Remember that FGEN had a good run from the beginning of the year. If you bought this stock in January, you would have paid 10 so many have doubled their money. FGEN has a heavy debt burden from the acquisition of EDC. Although the proceeds of the sale of meralco to PLDT by FPH can cover the debt, it has yet to be taken off its books. The play is actually on BPC and FPH because they have the most to from the sale and current price of meralco. EDC is a play on a potential buyer also which in time should affect the price of FGEN. You are right, it is cheap and its fundamentals are good. The anxiety is that it sells all its out put to meralco on an off take agreement and that can be threatened when the Lopezes are no longer in meralco.

      Comment by Gus Cosio | August 11, 2009 | Reply

      • Thank you for your reply. I will take this into consideration.

        Comment by Warren | August 12, 2009


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