There’s a new horizon
8:00pm Friday 5 February 2010 Philippine Stock Exchange Index 2855.64 (-2.03%)
Trade today (Friday) would have been nerve shattering for most or heart breaking for some at the very least. After seeing encouraging signs of recovery during Thursday’s session, we get hit with a 270 point plunge in Wall Street and similar drops through all of Europe. Actually, it looks like it was the Europeans that pulled the rug from under a potential U.S. recovery. Investors are now raising doubt on the ability of various governments in the European Union to cover their debt obligations.
In my view, the value of risk imputed in asset prices of developed economies are starting to be viewed differently by investors. The paradigm had always been that Europe and U.S. were the indubitable store of asset values. Now that there seems to be an insatiable need to issue debt to finance structural deficiencies arising from these countries, risk appreciation, therefore relative pricing of assets, has dramatically shifted.
Twenty years ago, the U.S. was ground zero for economic and political stability and Western Europe was in the next circle of stability. With yawning government deficit among these countries no different from the Less Developed countries (LDC) of the past, former LDCs like China, India, Taiwan, Brazil, Chile and the Asean are looking to be in better shape nowadays.
The Philippine stock market got creamed at the opening of trading session, plunging by 55 points or almost 2 percent. Fortunately, I was actually wanting the market to decline in order to buy the stocks I was watching at cheaper levels. I managed to successfully buy MPI at 2.22 which is something I can live with for a while. I tried buying MBT at 37 but supply ran out at the close before I got served. MBT closed at 37.50 with very good volume traded. I was also thinking of picking up MEG at 1.08 but changed my mind. MEGW1 came closer to earth with the decline of MEG which leads me to think that both counters could be a god trading buy for next week. I think that some of the blue chips stocks offer excellent value already. AP, EDC, FGEN, FPH and MER look like good buys at this point. TEL is probably very cheap already at its close of 2535, but this is the main stock holding of foreign funds and would be vulnerable to further lightening up by those guys.
Most of the jitters are coming from the developed countries because their belief systems in the market has been going out of whack over the last two years. The shifting fundamentals favoring the emerging markets should be looked at more closely because fundamentals are strong in these countries. I think that Asia lead by the strength of China and India, supported by robust performance of Asean as a whole and complimented by Korea, Hong Kong and Taiwan are the places to be. It will be just a matter of time before investors shift greater portfolio weight in this region, re-allocating what they take out from the western countries. To my mind, we in this part of the world ought to use this shake out in the west to feather our nest eggs. It is a matter of looking farther into the horizon which really looks bright from where Asia is standing. The Philippines will surely reap some of the benefits.
10 Comments »