Gus Cosio says so

Ideas on the Philippine Stock Market

Above and beyond?

8:30pm   Thursday   15 October 2009   Philippine Stock Exchange Index  2930.70 (market hasn’t opened)

With Wall Street up the way it was, the local market should break out of its pent-up situation.  I think this market wants to go up except there is always that fear that because we’ve been very strong since the beginning of the second quarter there should be a big decline.  We’ve had several months of strength, and  then, 2 months of moving sideways.  I don’t think the steep decline that people are afraid of will come before the end of the year.  We have to realize that practically all listed companies that trade actively in the market are either very well run companies, or at the very least, run on mere prudence.  This is simply because management has to disclose results regularly to the market.  Transparency and disclosure is an effective way of promoting good corporate governance.

I’m calling for a new buying impetus for the high profile stocks.  My call, however, is skewed to financial stocks.  I am very constructive about the prospects of the big banks led by MBT followed by smaller banks UBP, SECB and PNB.  I also feel that expensive BPI move above its 45 to 46 range as investors learn to live with slightly lower dividend yields.  I also think that TEL will resume its assault above 2600 as it slowly makes its way to 2800.  MER should also find impetus in the positive sentiment in the market.  The scuttlebutt is that some core shares are to be auctioned to the highest bidder.  In sympathy, FPH, FGEN, EDC and BPC are strongly on the rise.  If I were to place a bet on just one of these 5 stocks, I’d put my money on MER.  If I were not that bold, I’d find refuge in FGEN.  My message is simply that you must find some exposure on the play on this group of shares.

I’ve also kept an eye on AGI which has been in the dog house for a couple of days.  With the positive news on IPO’s of similar stocks in Hong Kong (I’m referring to the Wynn IPO climbing 6.9% on listing day), I think there may be some foreign buying on AGI as it is still a cheap way to gain exposure on gaming in the pHilippines.  WEB offers a similar story, in spite of its recent very strong run.

As to what to avoid, I’ll probably sell some FLI on strength.  There are some unknowns that have cropped up as a result of the recent calamities that could be devastating to immediate sales of FLI.  Two of their ready to deliver project had been badly flooded, so who on earth would be wanting to buy the unsold units right now.

If you have to be in property, I would go for RLC because I reckon that this stock is way undervalued compared to ALI and SMPH considering that their revenue picture are very similar.  I’d also put some weight of URC as a beneficiary of renewed consumer spending and because they produce a wide variety of products that can be seen as emergency provisions for relief operations.  These are the same products that people consume regularly for convenience – yes, instant noodles.

I’ll reiterate what I had been saying over the past few weeks which is do not be without exposure to the market because the trend is still intact and we may have gone beyond our two month pause.

Have an exciting day.

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October 15, 2009 - Posted by | Uncategorized

6 Comments »

  1. Hi Gus,

    I’ve been an avid reader of your blog since two weeks now and your information are very informative.

    Thank you for sharing! More power to you.

    Ken

    Comment by Ken | October 15, 2009 | Reply

    • you’re wlcome, ken. i try to keep the site both interesting and informative, hopefully, educational as well.

      Comment by Gus Cosio | October 15, 2009 | Reply

  2. Hi Sir Gus,

    Not a really good run for PSE as of the moment.

    Same with Ken here. Been reading your blog over the past two weeks. I quite noticed that you seldom or never mentioned BDO in your financial stocks discussion. After acquiring GE Money Bank and talks of acquiring EIB, whats your take on this?

    Thanks and God bless!

    Marcus

    Comment by Marcus | October 15, 2009 | Reply

    • Hey Marcus, you’re right. traders are taking some profit; but i can also see some positioning going on. It has been the case whenever wall street traded strongly overnight, the market opens strong, then profit taking ensues. However, when prices come to lower ranges, renewed buying follows. This behavior is symptomatic of positive sentiment in the market.
      About BDO. It’s a great bank except it is very expensive, around 30X earnings; too demanding for my taste. They have very poor margins so far. I think they haven’t shaken out the merger aftermath. one way of investing in BDO with probably better returns is through SM.

      Comment by Gus Cosio | October 15, 2009 | Reply

  3. Hi Gus,

    Great blog! Keep us posted with your insights as they are indeed educational.

    Comment by Gianfranco | October 15, 2009 | Reply

    • Yo Gianfranco,
      You’re very welcome to visit the site as often as you can. You’re comments are equally welcome. Good luck on your trades.
      Gus

      Comment by Gus Cosio | October 15, 2009 | Reply


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