Gus Cosio says so

Ideas on the Philippine Stock Market

Who left the money on the table?

9:10am  Wednesday  16 September 2009  Philippine Stock Exchange Index 2789.36 ( pre-open)

After reading that the BSP was in actuality not very accommodative in its monetary policy in spite of cutting interest rates from January to July this year, you may be wondering where all the liquidity in the market is coming from.  Fortunately, the economy had been generating its own savings separate from any monetary easing, thereby widening the country’s savings investment gap which started to emerge after the year 2000.  That gap  has continued to grow due to the parabolic growth of the country’s gross international reserves arising mainly from the growth of the export and OFW sectors.

Anyway, the governments retail treasury bonds auction yesterday was another phenomenal success, but what really took my cake was the 9.3% rise in foreign remittances for July.  Most global forecasters had expected 2009 remittances from OFW to decline by about 5% for the year.  So far, these remittances have only grown; and judging from steady growth until this rapid increase in July, we can only expect total remittance in 2009 to grow at a rate similar to that of 2008.

Question is – how do these developments help the stock market?  I think we’ve just set ourselves up for another rally in the coming days.  Tuesday’s 32.27 point drop will prove to be a buying opportunity.  A number of the strong stocks was sold down.  AC, AP, FPH, FGEN & MBT look to me as good trading buys. TEL and MER might take some guts buying, but I think both stocks are due for a bounce.  WEB and ISM were both down, but my instincts tell me that both were just gathering steam for the next move.  Even TUNA and SPH have given late comers an opportunity to hop in on the ride.

Basically, I’m looking for a rebound because if we look at he market over a five week period, what I see is a sideways consolidation which may have ended in the past 2-day down turn.  After all, our market has been lagging the regional index over the last 3 months.  We could just catch up this time around.

I think yesterday’s RTB auction results and the surprising growth in July remittance figure will spur a bit of enthusiasm.  The government bond market had opened already and there is a lot of follow through buying going on.  It will be another round of a lot of money chasing too few good yielding assets once more.  I, for one, am very optimistic and I’m willing to put money on the table.


September 15, 2009 - Posted by | Financial markets in Asia

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