Gus Cosio says so

Ideas on the Philippine Stock Market

Does doldrum mean drifting?

2pm  Tuesday   18 August 2009   Philippine Stock exchange Index  2731.55  (-1.43%)

If one did not have a longer time horizon, the last 2 trading days would have chased the uninitiated out of this market.  Putting things in perspective, the index hit a high of 2873 on Wednesday – the 12th – then saw a low today at 2693; that is a 6.3% range from the high.  That is a lot of excitement to take in a matter of days, especially when you have gotten used to seeing the market going one way.

First thing I notice is that the 20 most actively traded stocks are all down except BPC, FPH and FGEN which went the other way.  This despite MER continuously going south;  something must be afoot again.  Next is that in spite of the market losing as much as 78 points for the day, the index closed above the open (2720 open vs. 2731 close).  Finally, I see that the mining stocks are still in fashion.

Generally, the moves that we’d seen over the past few trading days have been defensive in nature.  There are no signs of sentiment shift.  The smart money do not want to get caught in any major correction so they are paring down positions in order to have the cash for stocks that will outperform in the next wave.

For those who were not able to pick up GMAP, GMA7, RLC, MPI, AGI and similar counters, this may be the opportunity to enter.  Stocks like WEB and ISM have been quite strong in this downturn; my gut feel tells me that it has some more to go.  Remember, these are cash rich companies with very strong underlying business franchises.

I believe that there is also a case to be made in banks – UBP, PNB and MBT.  The surge of BPC today also intrigues me; today was the highest value turnover this stock has seen in over a year.  It is in price/volume alert so there must be a good trade behind it.

All told, I perceive further volatility ahead, and therefore, trading opportunities.  I even foresee some doldrum days when the market will just drift because investors may want to avoid wide swings in the market.  In any case, diligence always pays off that is why I follow the market daily.

Advertisements

August 18, 2009 - Posted by | Financial markets in Asia

4 Comments »

  1. I always had this gut feel that Lopez stocks lead the market. In 2007/08 FPH and FGEN were some of the first to be hit heavily and plunged to unimaginable lows. Then in February/March 2009, these same stocks plus MER were some of the first to rise from the ashes. So I take the current movement in FGEN and FPH as good indicators. Plus FGEN had recently received fresh funds from FPH, for future stock subscription; such funds would help FGEN manage its debt load.

    Comment by Melvin | August 18, 2009 | Reply

    • An analyst of a foreign house sat with us about 6 weeks ago to give his insights on Benpres because it was very cheap at that time. He said that if anyone wanted to gain further control of Meralco and First Philippine Holdings, that party should buy around 2 seats worth of shares in BPC. I’m betting that someone is trying to do that now.

      Comment by Gus Cosio | August 18, 2009 | Reply

      • Whoa! The battle shifts to benpres pala. The sprawling Lopez empire is like a Russian matryoshka doll — doll nested within a doll. Ha ha. Thanks for the info, but it’s probably too late to get into the fray.

        Comment by Melvin | August 19, 2009

      • Benpres holds the controlling shares of the Lopezes in FPH and FPH controls the remaining 13% which they own in MER. FPH also owns the controlling of FGEN which in turn controls EDC. BPC is the cheapest way to gain control of all of these. It may not yet be too late, but it will be quite risky like buying MER above 200.

        Comment by Gus Cosio | August 19, 2009


Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: