Have you heard of Murphy’s law?
11:15 am Wednesday 14 April 2010 Philippine Stock exchange Index 3296.30 (down 3.6 points from the previous close)
Yesterday the index traded above 3300 for a while in early trade before we saw profit takers selling. Value turnover was also distorted by close to Php27 billion block sale of SMC and SMCB which was the result of San Miguel’s tender offer. There was also a block trade for SCC amounting to Php1.25 billion. Taking away the block trade, today’s value turnover still amounts to a shade over Php2 billion, so it was not so bad a trading day. Nevertheless, I think that the index is hitting resistance again above 3300.
What I observe is that strong stocks remain strong – AEV, AP, MBT, FPH, DMC. Even today, these stocks remain strong. The index, however, as of this writing has drifted below 3300. The stocks that I mentioned earlier remain firm and has moved better in spite of the broad market.
In the U.S., Intel reported better than expected profits. That should be good for the Philippine economy because it is an indication of renewed demand for electronic component products of which the country is a big exporter of. In the latest export volume report, the statistics show that 58% of total exports were electronic components. An export recovery coming at a time of massive spending by both government and election candidates should bode very well for listed companies particularly consumer stocks. That is why URC has been strong and companies like PIP and JFC. It could also have some positive effects on SPH who is rolling out its direct selling network similar to that of Avon or AmWay. The recovery of exports would also provide a good base for property stocks and even cement companies due to higher disposable incomes available to buy or construct dwellings. The latest figures shown by HLCM and CMT have supported this.
Anyway, I would not want to beat a dead horse again, but in the U.S. last night, I saw some kind of divergence – the S&P 500 went up and the volatility index also went up. Normally, these measures move in opposite directions. I think there are early signs of wariness showing up. The same wariness should have been prevalent in our market but somehow investors have been a lot more optimistic. Given the country’s economic fundamentals, I would not blame them. Unfortunately, the politics in this country has a tendency to create havoc in good times. Many of our countrymen seem to have a penchant for self-flagellation.
What are we to do in time as these? My common sense tells me that no one makes a mistake by being careful. I will choose to be patient and wait for prices to come my way. After all, if this market is really going to be strong, what would missing out on a few points hurt? If something goes very wrong with elections – Murphy’s law says “If anything can go wrong, it probably will” – it could really hurt, and hurt bad.
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