Gus Cosio says so

Ideas on the Philippine Stock Market

High cost of electricity

9:40am  Wednesday  3 November 2009  Philippine Stock Exchange Index- 2944.04 (a few minutes from opening bell)

New York regained part of Friday’s losses.  Some of the good news was contributed by Ford and Motorola who reported 3Q earnings above market expectation.  My view, however, is that the Dow and the S & P are showing real signs of fatigue and while the volatility index – the VIX – is down, it traded a 3 point range during the day.  What it says to me is that the big funds are trying to bank in more of their gains.  Information being passed in the options markets is that fund managers are buying out of the money puts which translates to a net sell in the market.

Anyway, what goes on in New York may not be what happens in Shanghai.  Then again, Shanghai saw its market consolidating at the end of 2Q09 in to the beginning of 3Q09.  These markets may not be in sync for the time being.  What is valuable to us in Manila is to figure out where we will gauge local sentiment from.

My view is that we’ll be looking at local excitement more than external markets.  What is going on in MER which has direct implications to TEL and MPI; FPH, BPC, FGEN & EDC; SMC, SM and possibly SMPH & BDO.  This play on MER has very far-reaching implications.  It is going change the business landscape in the short run.  As far as the market today is concerned, it will really spark a lot of trading on the stocks I mentioned earlier.  I must remind investors, however, not to forget the other good ones which are cheaper to get when the market is distracted with the heavy weight plays.  These stocks are by no means light weights – I’m referring to the Ayala stocks which present good stores of value.  With BPI showing  net income growth of 38% for the 9-months ending 30 September 2009, earnings recovery from the other companies may not be far behind.

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November 3, 2009 - Posted by | Financial markets in Asia

5 Comments »

  1. hi gus,
    w/ this MER play, how is it going to affect MPI’s price? i happen to have a lot of it @ 3.3 but was not able to sell it when it reaches 3.6ish. thanks and i really like your blog.

    Comment by lulong | November 3, 2009 | Reply

    • Hi Lulong,
      We banged our heads trying to figure out what’s going on in this Meralco M&A gambit. It’s going to cost Mr. Sy a pretty penny – at 300 pesos per share, my arithmetic puts it to 44 billion pesos plus change. MPI had acquired most of its shares at an average of below 200 – first tranche at 91, next at 126 and I ‘m not sure of the last (which was the smallest lot of the 3) but if my memory serves me right, it was 295. MVP has the alternative of matching the price or tag along with some shares for sale at 300 also. At the very least, MPI should make some money. Now, MPI is a very trading oriented stock. Initially, I see a sell off in MPI but I do not think that it will go significantly below 3.30. In my opinion, 3.20 is a buy on the stock and anything above 3.60 is a sell. In short, you can make money trading this stock on a range. On the whole, I think it is worth following. Bottom line, you should be comfortable with your entry and sell prices, jut remember to trade it.

      Comment by Gus Cosio | November 3, 2009 | Reply

  2. Hello Sir Gus,

    Do you have any thoughts on the play on PX also? It seems there are big groups in acquisition mode for this stock.

    Comment by pierre | November 3, 2009 | Reply

    • PX has been on the M&A list for some time already. They did a huge block trade today which increased the stake of MVP’s group. The stock will definitely go higher, but I’d wait to buy on weakness. I don’t believe in chasing prices. You should at least observe where the price stabilizes. As to the fundamentals of the stock, it is a real winner.

      Comment by Gus Cosio | November 3, 2009 | Reply

      • My sentiments exactly thanks Sir Gus

        Comment by pierre | November 3, 2009


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