Patience is getting boring!
8:30am Tuesday 16 March 2010 Philippine Stock Exchange Index 3076.79 (+0.126%)
Yesterday, our market opened strong and surged in the first half hour. The rally was led by the very strong move of AEV and AP on the back of very good results in AP whose parent is AEV. Later in the session we saw some selling into strength of these stocks already. Those who were playing the dividend price arbitrage continued to sell TEL contributing to the pull back of the index. TEL is now just above the ex dividend equivalent of 2535 (2675 minus 141 = 2536). I would be a patient buyer of TEL and wait for it to settle closer to 2500. A softer MER also weighed on prices pulling back. I am also a patient buyer of MER but it would take more patience than waiting for TEL because I would like to see it closer to 160.
Yesterday’s trading session tells me that strong stocks like MBT, AC, BPI, URC and RLC look like they are not going anywhere for the time being. We are at the second half of March and Easter holidays are approaching. This means most international fund managers will not be aggressive with their portfolios. They will look only into very compelling ideas before making major shifts in their portfolios so I see not reason for sharp directional moves in the index.
Having said that, it appears that non-index stocks are taking the day in terms of price movements. Property stocks SMDC and VLL and even MEG look to be attracting a lot of interest. I would not be averse to looking into SINO and LND for speculative or opportunistic trades since they have shown some volume lately. Some of the stocks that I am waiting to buy are MPI at 2.70, AGI below 5.00, MEGW1 below .50, MBT at 44 or better, DMC at 12 or hopefully lower.
In the neighborhood, Asian stocks dropped while oil and copper declined on prospects China will take more steps to cool its economy. The Shanghai Stock Exchange Composite sank to a five-week low.
In the U.S., property prices are showing support at current levels. Retails sales in the U.S. is recovering which is good for the Philippines. Philippine January exports of electronics parts are up which is a very good sign. Remittances for January 2010 are up 8.5% year on year. That is an excellent indicator for growth in domestic retail sales.
The U.S. market has been quite positive but I feel that no strong surge can be seen there either. Although the equities market globally is generally in a positive trend due to low interest rates, there are always reasons that arise to bring prices closer to reasonable values. The problem with recommending that people be patient is that it gets boring.
17 Comments »