Gus Cosio says so

Ideas on the Philippine Stock Market

By technical Knockout!

7:00am  Monday  16 November 2009  Philippine Stock Exchange Index  3034.32 Friday close(-1.28% from Thursday)

First of all, let me share in the exuberance of most Filipinos wherever they are in the victory of Manny Pacquiao.  I think the national psyche has once more been given a boost.  Congratulations, Manny.  You were truly a gentleman boxer and a true sportsman.

I’m trying to gauge the market mood this coming week.  The PSEi was down 38 points last Friday even as the DJIA was up Thursday.  It was up again Friday but the correlations seems to have diverged for the time being.  One stock that pulled the index down was PX which came off by  3 pesos.  TEL, AC, SM, GLO and a number of index stocks managed to weigh down the market as well.  Ironically, I do not see to many negative signs in the market.  For one, I’m quite happy that AC is down because I’d like to accumulate the stock.  I’m also looking to buy TEL a tad lower from here.  I noticed that ALI was firm and so was BPI which eked a bit past its 48 resistance.  I also noticed that PNB was going the other way as investors took the 134% rise in  9 month income as a turn around in the bank’s fortunes.

I mentioned to a reader who sought some advise that I thought EEI was good value at current levels because of a new multi billion dollar project in Papua New Guinea.  I believe that DMC offers exceptional value as well given the cheaper valuation of Maynilad and the recent acquisition of the Calaca power plant.  My thoughts are that some stocks remain cheap in spite of their movement to higher prices.  My advice would be to see if there has been sufficient price correction in the stock before making a buy decision.  A stock that would be worth considering is GMA7/GMAP whose earnings results for the first 9 months of 2009 are exceptional.  The price has consolidated somewhat.  PIP is also a stock that has been consolidaing and may have started to gather steam in volume of shares traded.

All told, we come to the market at the beginning of the week with positive sentiments about our country because of the Pacman’s victory.  Although I avoid offering correlation, I can help to think about past observations that New York analysts said of their market.  Can you imagine that they would correlate rises in the index to the rising of hemlines of ladies skirts.  I suppose that when people feel good about themselves, the same feeling can also be felt in their market decisions.  But then again, on Monday they lift price controls on petroleum products; could that give people a negative sentiment.  I, for one, am forever the optimist; perhaps some of these stocks look like they’re headed better.  I just think that the risk reward ratio is still on our side.

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November 16, 2009 - Posted by | Financial markets in Asia

4 Comments »

  1. Sir Gus, a portion of our family’s portfolio is in dividend-paying stocks. Majority of our holdings are in GMA7 and CHIB. We’d like to add more, currently reviewing the other payers.

    Basically, we go for companies with increasing Free Cash Flow and/or history of stable dividend payouts. Hoping someday these cash machine will be in full gear for passive income.

    Do you have an outlook on PSE dividend payers? We’d appreciate your insight on this topic. Thanks po!

    Comment by Drew | November 16, 2009 | Reply

    • Hi Drew,
      My source is still updating our dividend list. Of the back of my head I can tell you a few: TEL,GLO, GMA7, SPH, PSE, RLC, URC,PIP. There are a good number. You can go to http://www.pse.com.ph to check out dividend records of all lsited stocks.

      Comment by Gus Cosio | November 16, 2009 | Reply

  2. PIP? With sugar prices at all time highs, I would’ve thought that profits may be seriously challenged.

    Comment by alabanger | November 16, 2009 | Reply

    • Hi alabanger,
      you’re probably right but a company that deals in sugar regularly should know what to do. My sense is that the stock had gone through some consolidation and is starting to gather steam. Incidentally, PIP pays dividends which turn out to be just below 5%. Not bad in the present interest rate environment.

      Comment by Gus Cosio | November 16, 2009 | Reply


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