Gus Cosio says so

Ideas on the Philippine Stock Market

Power outrage

9:55 am   Monday   7 December 2009  Philippine Stock Exchange Index   3052.1

A brutal massacre of innocent civilians and media practitioners.  Martial law in Maguindanao.  This government has really gone to the pits.  What has happened in our country over the past 2 weeks is a national shame.  I am totally outraged at this carnage that reflects the impunity with which the powerful people in this country behave.  The degree by which the politicians in Maguindanao feel that they are above the law may be to a very abusive level, but the way politicians behave all over this country merely reflects the kind of thinking that people in power have.  In this country, a high position makes people feel that they are above the law.  Starting with the president, then observing the cabinet members, then those who head vital government corporations, lawmakers, even bureaucrats with special car plate numbers.  These guys behave as if they can get away with anything.  No wonder vagabonds cloaked in official positions in Maguindanao could just kill and believe that they could get away with it.  So many politicians in this country have gotten away with murder, larceny, fraud, deception and still enjoy the adulation of their constituents.

Is this going to hurt the markets?  Unfortunately or fortunately, it will not.  People are already impervious to these things.  Generations of political abuse have numbed the Filipino’s sensibilities already.  People even think that political abuse is manifested purely in violence.  How dumb can people get.  How about the abuse of presenting the electorate with unscrupulous and unworthy candidates for public office merely because of popularity or the ability to spend a lot of money.  That kind of subtle abuse gives rise to the bloodshed we had just experienced in Central Mindanao.

Anyway, we may see a blip down when the market opens Monday because martial law will always attract instability.  I think that people have already seen through this gambit.  Martial law will be lifted in Maguindanao next week because it is not the solution to this problem.  The solution is the quick carriage of justice and anything less will be a very temporary expedient.  I think that the market is in a consolidating mood anyway.  People will use martial law in Maguindanao as an excuse to sell.

Although there is good news on the foreign front highlighted by better than expected employment numbers in the U.S., local investors will likely be introspective about their positions because we have come to a point where investors are no longer afraid that the market will run away from them.  We traded above the 3100 last week which I thought was the target of this rally.  Now that we are there, I think there is little to look forward to for the time being.  That being said, I think the excitement will not be seen in the broad market but in special situations – translated as “stocks in play.”  The scuttlebutt is that the plays are going to be in ACR, AGI and SPH up to year end.  With the market thinning out in the next few days, it will be very easy to push up these stocks.  PIP may also be having its day soon.

For the more serious player, I would take a closer look at AC, AP, GMAP, RLC, ALI, SMPH, SM and even GLO.  The trading horizon, however, should be beyond year-end looking at January/February 2010.  I would also avoid buying the strong moves rather approach the market counter-intuitively.  Buy when it is weak and sit still when there are upward spikes.  This season is not for momentum trading but for range trading.  We’ve been seeing ranges being established every time resistance is broken since July this year.  I see no reason why it won’t work again this time.

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December 7, 2009 - Posted by | Financial markets in Asia

3 Comments »

  1. That is the sad reality of the country we live in. What makes things even worse is how everything seems to be about serving this or that person’s own interest. As long as interests are protected all we do is talk. Say for instance politicians who speak of justice for the victims of the massacre and when martial law is imposed to give authorities more flexibility, they start complaining about how that violates basic human rights. I am no Arroyo supporter, but i do believe with the imposition of martial law and the suspension of the writ of habeas corpus.. we need to cut her some slack.

    By the way, I love you blog. I’ve been an avid reader for the past few weeks. More power to you.

    Comment by Norman Go | December 7, 2009 | Reply

    • Norman,
      I express my outrage at the massacre and the way our political leaders do things in this country. What I get very adamant about is how power is so abused in many ways by existing leaders and wannabe leaders. Nevertheless, there will be short term implication of this martial law. If our country’s leaders really want to change the landscape of governance in this country, there should be less love for power and more love for country. Sacrifice sometimes mean that sometimes a leader must subordinate his or her own interest to the cause of righteousness and justice.
      Anyway, in spite of all this volatility in peace and order and regional political developments. I think our markets are really due for some adjustments.

      Comment by Gus Cosio | December 7, 2009 | Reply

      • I agree with what your saying, but to be honest with you I don’t think this is the sole problem of how our leaders perceive power as being something that serves their self interest. Love of country or for the good of our country is not the sole duty of politicians that rule our country, i believe it is everyone’s responsibility. At the end of the day, it is ultimately us who vote these politicians into office, the very same politicians who cling on to power when is it not proper and the same politicians that appoint advisers and cabinet members that eventually help spread the system of serving one’s own interest before serving country. We may look at how many of our own people vote out of popularity or how they sell their votes to politicians as an example. True enough some people are actually coerced, but I do believe that everyone is still left with an unalienable right to choose. And just like what you said, it will be about sacrifice after all.
        I also agree with you that martial law is a short-term and temporary solution, but as of the moment I would like to believe that the crisis in maguindanao calls for just that. If properly administered, by the way. I guess we will just have to wait and see.

        Regarding the markets, I have questions but I’m not sure if this thread is the correct venue to ask them.

        Comment by Norman Go | December 8, 2009


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