Slow and soft
6:10 pm Monday 5 July 2010 Philippine Stock Exchange Index 3311.74 (+0.63%)
Of the 20 point rise in the index today, 18 points were contributed by five stocks – TEL (5.48), AEV (5.33), AC (4.14), EDC (1.68) and AP (1.27). It also appears that no one wanted to commit much into the market today. The dismal volume tells me that buyers would have abandoned the market today except for those who are convinced that our market had indeed decoupled. Prices are higher, but volumes are lower. This tells a different story of ambivalence. As I mentioned yesterday, there are a lot of cheap stocks out there. Unfortunately, not too much interest has developed yet.
It is encouraging that the U.S. economy was still generating jobs in the private sector based on the 83,000 increase in private payrolls. It is quite clear, however, that the economic recovery has shifted into a lower gear. In Europe, it would be pretty much the same with sharp slowdowns in Southern Europe but with some manufacturing pick up in the north – Germany, the Netherlands and Poland. Europe and Asia is trading mixed given the New York Holiday today.
I am not surprised that TEL went stronger today because even at 2400, this stock is cheap. EDC looks to be strongly supported at 4.50. It closed at 4.55 already because it has run out of sellers. My theory that AP would be very strong below 18 seems to have been proven right today. DMC at 17 looks to be attracting strong interest also.
Anyway, it would be premature to say that investors were unfazed by the declines in Wall Street because many of them are still skeptical. Historically, the third quarter is slow when it comes to stock investing. The reason is simple; it is vacation time in the western hemisphere where most of the fund managers are located. Actually, even in Singapore, Hong-Kong, Japan and Korea, a lot of finance people take their vacations this time of the year.
I suspect that the next couple of weeks are going to be tough in the market because of the west. With activity subdued and many nurturing fears of another slow growth for the global economy in the two quarters ahead, it would be good not to be bold. A nibble here and there would probably not hurt trading positions. The main thing is to raise enough cash in anticipation of a slowdown. When activity is slow, prices turn soft anyway.
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Gus Cosio at the Merrill Lynch 2008 Rising Stars Conference in Singapore
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Gus Cosio says so 
Sir Gus,
If you have PNB, EDC, MPI and AGI in you portfolio which one would you sell to raise cash? Thank you sir!
Selling into strength “missed money is better than lost money”
Hi John,
I would probably sell AGI or MPI. PNB could go anytime soon while EDC is ridiculously cheap.
Hi Sir Gus, I bought DMC At 18, AP at 18.75, FGEN at10.25, as well as PNB 29. Should I sell any of them now at a loss just to raise cash or wait for the market to recover? Im a newbie in trading, your advice would be greatly appreciated.
Thank you!
Cholo,
If you still have cash in your portfolio, there is no need to sell. But if you needed to sell, I would probably sell FGEN.
Cash is King Right Now…….US unemployment will rise next month because many 2010 Graduates will not find a permanent job within this year….
Carla,
Cash is king only if you plan to use it later. Otherwise, holding cash costs you lost opportunity.
Good morning to you sir Gus! Im just wondering, do you have GLO in your portfolio? May I know your take in this stock? Thank you.
HI Dex,
I don’t like GLO at these prices. I’d rather go for TEL.
I see..would you mind telling me at what price would you be willing to get GLO?
so TEL is still indeed a good buy at 2400 like what friends say. Im a noob by the way 😀 and your website is really helpful. Currently, I got AP and PNB.
Dex,
Unfortunately, I do not think I’d like to touch GLO at all because it is losing market share to DGTL unlike TEL which has remained unscathed. AP and PNB will do wonders for you.
Hi Sir Gus.
Is 29 pesos per share already cheap for PNB? I’m planning to buy some today. Thanks.
Hi Tubski,
Yes PNB is cheap at 29. I do not think it could go much lower.
Hi Sir Gus,
May I know what’s your take in PIP? About 30% of my portfolio is invested at it at an average price P2.88. Do you have any recommendation for me what to do about it?
Deuts,
I think the effective range for PIP is 2.65 to 3.00. It could break out to 3.25 but farther than that, I do not see it happening.
Thanks for that insight. Appreciate it very much!
Deuts,
I just received research this morning on PIP. The earnings momentum going into FY 2011 looks to be slowing down. May I suggest that you sell PIP on any strength.
Sir Gus,
I sell my AGI at loss and shift to PNB… I hope I made a right decision.
Jaayem,
Just keep your fingers crossed.
I smell the aroma of a Good Profit in 3 or 4 weeks time…..Bought heavily last week…..added some more yesterday….
Profiteer,
Just be prudent. Just like you, I like the market, but global sentiment tells me that it is prudent to keep some cash.
Hi Sir Gus,
SCC has a good performance today and I have been holding it for quite some time. Do you have thoughts what will happen to it after the stock rights, I am thinking to sell it by now. I am just a newbie, and I don’t know how the market will react after the stock right offering(I think its July 15).
Thanks in advance
Cliff,
I just read that a foreign broker thinks SCC is now worth 125. Just hold on to your SCC for a while longer.
thanks sir GUS. I hold my SCC and it gain today. Another good performance by SCC. By the way, do you have idea when is the start of releasing 2nd quarter results?
hi sir Gus! i got BPI, FLI, PX and PNX in my portfolio. What’s your take on these stocks for the next few days? My next target for my portfolio are EDC and TUNA. I’m always following your insights and advices. Thanks.
Ghie,
I think BPI will firm up in the next few days. FLI is a trading stock and is normally volatile; you can take profits when you have it already. PNX is not a very liquid nor a well followed stick. It takes a while for a stock like this to be noticed, but I think the business itself is quite good. EDC around 5 might not be such a bargain. Tuna is also a tough stock to own yet; you can wait when it goes down. Rather than look at TUNA, try PNB at 29 or even PIP at 2.70.
thank you for your wonderful advice sir! God bless you
buy stocks with good support like EDC,SCC and TEL…Avoid ICT
Thanks, Jay.
Sir Gus and Jay,
Any reason why we should avoid ICT?
Chinky,
In my opinion, ICT is expensive now. People bought this up on a theme of recovery in world trade. Possible double dip could scuttle imports from the U.S. and Europe.
Sir Gus,
What do you think of buying DGTL around 1.46-1.48? Thanks sir.
Hi John,
I think DGTL is worth the gamble at these prices. Risk reward ratio is in your favor.
Thanks sir gus! God bless and more power!
TEL really looks good. Im waiting for it to go below 2400 🙂
I agree, TEL at 2400 or below is screaming cheap.
Hey sir gus,
I purchased FPH recently… but despite the really good PE ratio it seems like a lot of people are still selling. Why do you think that is so? Thanks
Norman
Norman,
I think the story on FPH has gone stale already. Even FGEN has gone a bit slow. The ultimate driver for FPH is really EDC. Why don’t you just go for EDC instead of FPH>
Hi Sir Gus,
What about LPZ? it is at 3.35 at the moment, would you take it?
Dex,
I would hold off for a few days before picking up LPZ. If it holds at these levels and the market sentiment remains alright, perhaps it could be a good buy.
Thanks a lot 😀
Sir Gus, do you happen to trade in the Singapore stock market as well?
Hi dex,
I used to when I lived in Singapore, but I haven’t followed stocks there in a long time.
i have in my portfolio right now edc, pnb, meg, mbt. Would u still move to other stocks if u were holding these?thanks! Feedback would be very much appreciated sir!
sir gus?feedback please thanks!
Just hang on to these stocks until it hits your targets. I’d target 40 for PNB, 5.50 for EDC and 70 for MBT. I have no feel for MEG.
Sir Gus,
It was disclosed today that Allied Bank’s Board approved the sale of the company’s shareholdings in Oceanic Holding Ltd. subject to the approval of the regulator. Do you think this is the catalyst for PNB to fly and catch up with other banking issues? Thanks and more power.
Really? I think that has been approved a long time ago… they just have no buyer..
to clarify my statement, the approval was to sell it to Mr. John Kim Chuy Ng subject to approval of US regulators.
Ic..I am based here currently and have a trading account ready but im quite hesitant at the moment.
Hi Dex,
since your based singapore, how is UIC going on in the market and the property and malls there?
Thanks
UIC is not active in the market. Not much activity compared to Capitaland which is doing good since last month. My interest is at Capitaland and Wilmar actually. Im looking at Genting SP as well. They are highly traded at the moment.
Thank you Dex, nice to have a reader based over there. On UIC, I read that both its major shareholders, UOB group and JGS continues to slowly buy shares.
Regards
Hi sir, it seems that lopez power stocks havent been riding in the same direction as the aboitizes. Any thoughts on why this is happening?
regards.
Mark,
Personally, I think the Aboitizes have been on a roll over the last 3 years. the Lopezes, however, still have to get their act together. They haven’t made a spectacular move anywhere yet. They bought EDC around 9. It is now below 5. That reflects the track record of the Lopezes. EDC, nevertheless, remains undervalued and is probably the stock where the Lopezes can regain credibility.
FOR ALL WHO STUCK WITH PNB! http://business.inquirer.net/money/breakingnews/view/20100707-279783/Last-obstacle-to-PNB-Allied-Bank-merger-removed
not yet guaranteed, you should take a look at ANC… ERAP has new revelations, and I don’t think P.Noy would want to be so closely associated with Mr. Tan…. something is brewing here…
I’m curious…. how does P.Noy and Erap have anything to do with the progress of the merger of Allied Bank and PNB?
Norman, you probably haven’t read monsod’s column about the big tax evasion case with Lucio and Allied, and the possibility that it might be reopened under this administration… Even Kim Henares has said that with the sufficient proof, she’ll reopen the issue.. Now you have ERAP claiming that Lucio Tan paid off Davide to dismiss the tax evasion case.. My gut feel tells me that this drama isn’t over yet, If PNoy can pull off the wang-wang drama I don’t believe he will just let this issue slide… but then again, you’re free to get on the train if you fear that you’re gonna get left behind, it’s anybody’s ballgame anyway.
http://www.bworldonline.com/main/content.php?id=12716&src=2
I’ve kept track of that for some time.. the case has been dismissed already for some time by the supreme court no less.. So i don’t see how Erap’s revelation can carry weight. And I still don’t see how the office of the president would interfere in something like this..
hi raymund, PNB will go up after the Merger not after the news..Sir Gus reco PNB below 25/sh last January…
Hi,
I read the Bworld story on the PNB tax case and it seems that such case was normal before. Many big banks did not pay doc stamp tax on those special deposits.Even MBt have disclosure before on its pending docs stamps case with the BIR. At any case, there is proper forum for those cases which are the BIR and the courts later on.
In the mean time, its business as usual at PNB and Allied Bnk and unless the potential tax liability may hamper the net capital of Allied bank (e.g. if its P10B) then such may just be noted on.
thanks
Go ahead and jump in PNB!! you’ll only get burned afterwards muhahahahahhahahaha
PNB is at 33.50 as I type.
Hi Guys, that’s just an application still with the FEDs, it’s not yet final… but here’s to hoping that it is final!
Hi Sir Gus, Sir What are the risk & Reward in buying warrants like MegW1…thanks!
Hi Gus… with all of these news about the PNB Allied merger and LTan’s tax evasion case, will it be too risky to continue investing 80% of one’s cash in PNB at P29 now? Am I too late to buy SCC at P96 today? Thanks for your valuable advice.
Sir Bobby,
If I may, there seems to be other stocks that have good growth prospects still. I notice that analysts tend to say in many research that they are bullish with a company because of its “expansion plans” and being agreesive in expansion. That to me is a sign that the company failed to properly position itself ahead and it is just trying to catch up.
Contrast it with those who have properly positioned years ahead. They will be the one to have true growth prospects and it will indicate a lot on the business foresight of those who guide and run the companies.
Thanks
Bobby,
It is always very risky to invest 80% in one stock. Right now, PNB is 14% of my personal portfolio. All the news about Lucio Tan’s tax evasion is already in the price. If PNB is forced to divest of PNB, there will be a buyer who will gladly pay the real value of PNB which should be close to the book value.
On SCC, try not to chase prices although I think SCC is worth close to 125.
Just Hold on to your stocks no need to do anything…Watch and Wait until PSE goes above 3500…
Hi Sir, What’s the best price to enter GMA7/GMAP? thanks! I bought TEL 3 days ago..
Jay,
I don’t think I’d suggest GMA& or GMAP just yet as investors currently do not favor media stocks. If you really like the stock, wait for it to be below 6 to take a position. TEL will likely move slowly to 2500 in 3 months.
Ok..Thanks sir.
Sir Gus, I’m really worried about my FGEN, which I bought at 10.50 (1,000 shares). Now it’s 9.90. Is there any chance that this will be lower? Do you advise to sell at loss? Thanks sir.
Newinstocks,
Don’t be too worried that your stock did not go up in price immediately after you bought. Remeber, the reason you bought that stock was that you wanted to invest in it. FGEN is fumdamentally a good stock in a growth sector – the power sector. It will eventually give you a return around 6 to 12 months down the road and it will likely to be a reurn well above 10%.
Okay, thanks Sir Gus!
Finally. PNB went above 29 😀
easy for pnb at 32 by next week…
@afraid if you dont want PNB or any Blue chip stocks you can buy BASURA stocks and hold it longterm…..
Sophia,
I don’t think your comment is very helpful to anyone. Aside from the clear sarcasm, I sense a bit of a mocking tone which is not constructive in any way. Instead of writing such, why not voice your opinion as to why PNB and other blues are good to invest in.
Hi Sir Gus,
SPH went down another notch today at 2.46, a few ticks away from its 52 week low of 2.42 a piece. I made a wrong decision of holding on to it last year when it went up to 4 pesos. I ended up with a huge paper loss. What’s your view on the downtrend? Would it be a good idea to take advantage of the current cheap cost? Thanks in advance.
Finch,
I had a meeting with the SPH CFO and asked why the ’09 results were very disappointing. It seems that a lot of legacy issues had to be resolved last year. The CFO assure me that things have improved already this year. The guidance they are giving is a profit figure above 140 million. That’s a PE of around 12X; not expensive but not cheap either. It is likely to languish in this range for a while.
I appreciate all your valuable inputs, Sir Gus. Kudos to you!
Sir Gus,
Good day! did they mention anything about dividends or maybe a buyback for the year? Just curious. Thank you very much!
Martin,
One company that announced a buy-back is FPH. TEL should be paying out a dividend in August.
don’t count on dividends. they’re under restrictions in their ability to declare by their creditor banks (see annual report). book value is around php 3.15. however, my valuation is around php 2.00 at my most optimistic. the php 2.00 is based on current assets against total liabilities. preferably i would be more pessimistic and discount things like inventory which would place the valuation below php 2.00.
just to clarify, instead of “restrictions” i should have used “conditions”. sph is not precluded from declaring dividends but they have to satisfy certain conditions which take into account their creditor banks. sph is allowed to pre-pay the debt this coming 4th quarter.
Hi Sir Gus,
The market reach a record high today. Will it be advisable to buy DMC at current level (18.75)?. Or will wait for it’s correction considering the uncertainty of the global market?
Also, are there any reading materials you can advise which can be downloaded online. Just wanted to widen my knowledge regarding stock market trading
Sir Gus,
PNB was up 3.45% today but I was expecting higher because Allied has already found a buyer for its Oceanic Holdings shares. Do you think this good news is already factored in PNB’s price?
@ chinky dont rely on news remember what INQ release about BDO buying ASIA trust Bank when PNB is Going Up from 23 to 30/sh ….
Hi!Jay What happen to that rumor about BDO buying Asiabank. Maybe its a False Flag…
@jay, there was a PSE disclosure by Allied Bank on this matter. http://www.pse.com.ph/html/disclosure/pdf/2010/pdf/dc2010-4689_ABC.pdf
Hi chinky, they’ve found a buyer but the transaction has yet to be approved by the US FEDs this July 22 hopefully…
chinky,
I think the market is waiting for the news that ABC has finally sold the Oceanic Holdings shares. At this point, they’ve only found a buyer – they still have to hurdle regulatory approval by the US Fed. July 22 is the deadline for comments regarding the proposed sale.
Mal,
I agree, the market is probably waiting for the approval by US Fed. Thanks.
Sir Gus,
I have been in the market for quite some time now and I am glad that I have been part of the highs and lows of our season. This sort of made my trading actions more mature and directed. Today was quite surprising for me due to the sudden rise in most of my holdings. This made me think again of how i understood the stock market. My question is, what really determines the price of a stock everytime the market opens? I mean for example, Stock X closed today at P10. The next day it opens, would its opening value be dependent on the first person who sells or buys or would it be dependent on let us say pse who says its worth now 20? Sorry for such a basic question but with the dramatic rise and falls during the past weeks, it made me think again about how these stocks are valued.
Thanks!
Jude,
what you should remember is that a market is made up off a seller and a buyer. Both have an idea of what they want to do. A buyer is normally one who is convinced that he likes the item. A seller is one who has the supply and would have varying reasons why he would want to sell.
Guys, if you were too choose between LPZ and SMPH, which one would you take? Any opinion will be greatly appreciated. Thanks.
dex, as a trader i would choose lpz but as an investor i would rather choose smph.
@Dex, I believe LPZ is Lopez group’s holding company while SMPH is SM group’s shopping malls holding company.
Since I love to shop, I chose SMPH because of their steady income from their malls leasable spaces. They’re expanding in China with 3 malls to date and target 40 malls locally end of 2010. Also read that they’re readying plans to go into REITs.
Sir Gus,
You mentioned that you’ve sold some of your positions days ago to raise some cash in your portfolio just incase the market goes down because of global issues, Do you think it is time go back and be 100% invested in the market? And what % of your portfolio is cash? Thank you sir. And oh, what do you think of PX at 11?
px at 10.75… i love it… hows your mpi john? still holding?
Hi draco23,
I’ve sold MPI and AGI to raise cash, i only have PNB and EDC in my portfolio right now with approximately 35% cash left. Still waiting on sir Gus’s opinion about being 100% invested. So far, following his recommendations have been profitable.
John,
I remain gun shy on stocks for the time being. I do not think that prices could run away from us just yet. Be mindful, however, that we are currently decoupled witht the rest of the developed markets.
I’ll watch and wait im all in na…Wait for the PSE(my stocks to go up )and sell….Good luck to all traders tomorrow…Godbless….
i agree with you benny, if we look at history just this recent 2008 global financial crisis most of our listed company have gone up spectacularly…lesson provided we have choosen a stocks that are good then we will still end up winners.
PSE might peak by OCT or NOV @ around 3650-3750..We have 3 to 4 months left…..GO GO PSE……
PNB has a disclosure for today in the PSE website in case some of you guys have not seen it yet.