Gus Cosio says so

Ideas on the Philippine Stock Market

Hitting the beaches

11:10 pm  Thursday  17 February 2011

Once again I’ve been on the road and have not had enough time to post my thoughts.  Davao City was very nice – clean, orderly and very wide roads.  I’d like to visit the city again for a longer time. I love Davao pomeloes.

I’ve also notice so much unpleasant posts being made.  I will ignore such posts and not dignify them with a comment.  I would like to suggest that decent people on the site be a bit more discerning and respond only to comments that are sensible and constructive.  This is not a site where everybody has to think the same way, so if people do not agree or like your point, please leave it at that.  I never intended this site to convince people to buy, sell or adopt my views on a stock or the market.  I want people to develop stock market sense with the comments I make.  I also want people to understand that there are nuances to local markets so that they do not become very bookish in their investing or trading activities.

Anyway, I am very pleased that the market has been recovering over the past week although I remain cautious.  Today is a very good example of a market going strong, but the foreign funds are net sellers.  It is likely that they are selling much of their TEL because it has become less important in the index.  It used to be that Foreign funds used TEL as their main exposure to the Philippine market.  Now, you have other blue chips like AEV, AP, DMC, MBT, BPI and the like that can give better Philippine exposure than TEL.

In general, I do not think that the broad Philippine market can go much higher because local investors remain wary of foreign funds.  Foreign funds, on the other hand, are continuing to reduce exposure to the local market.  It will take a few more weeks before sentiment changes, so please think in terms of trading a range.  Nevermind if you take short-term losses.  You can make it back if you successfully trade the range.

In the meantime, I’ll be off to the beaches of Panglao Island for a few days.  I don’t think this market will run away from me anyway, no matter where it goes.

Advertisements

February 17, 2011 - Posted by | Uncategorized

50 Comments »

  1. Enjoy the beach.

    Comment by Sh3rwin | February 18, 2011 | Reply

  2. Please continue with what you are doing. It helps a lot of people to understand how and why the market moves. Maraming salamat po

    Comment by Miguel | February 18, 2011 | Reply

  3. Happy Vacation sir Gus! as a small filipino investor, i would be very happy to note that the market remained strong despite the foreign net selling. I still remain bullish and happy since the market is cheap for new local entries. i prefer local to have profits than foreign since local inv will reinvest that profit somewhat in the phil and it would benefit me somewhat.

    Comment by Bu$h | February 18, 2011 | Reply

  4. Yes, with the market in this “consolidation” phase its indeed a great time to take mini-vacations. Have a relaxed weekend sir.

    Comment by MaxM | February 18, 2011 | Reply

    • agree 100%, but the waves of the beach will probably change in a few weeks time (to bullish trend). let’s wait and see 😉

      Comment by jhesqi | February 18, 2011 | Reply

  5. TEL will be facing a lot of headwinds as far as growing or even maintaining its core business as the mobile phone industry is reaching a saturation point with rapidly declining margins (for all TELCOS) due to competition.

    Management’s foresight has already anticipated this reality and is probably why they resorted include PLDT in the Meralco investment to look for sustained growth that can have a material impact on its astounding Php40B bottom line.

    Comment by cj ch | February 18, 2011 | Reply

    • I thought PLDT bought meralco only as part of that struggle for control between MVP and SM? Basically since you need money to buy MER and MPI didn’t have all of it.. but I could be wrong..

      Comment by jasper | February 18, 2011 | Reply

      • the telco business is a mature business so TEL had to look for other sources of income from other industries…that’s why they bought into MER.

        the main reason why they’d venture into MER is income—and since they want to maximize it they’d do everything to have the biggest ownership in MER so that they could have control.

        Comment by ricky | February 18, 2011

      • Pldt bought Mer as a Preemptive move against San Miguel Corp…SMC planning to enter Telcom business thru Liberty telecom…Not good for Tel and Glo if Smc enter the very competitive telcom business….

        Comment by Cokie | February 18, 2011

      • Broadband-over-powerline (BPL)project—which can potentially provide cheaper high-speed Internet to millions of households—was believed to be the PLDT group’s biggest motivation in buying into Meralco.

        – I saw this from Philippine Daily Inquirer.

        Comment by al | February 18, 2011

  6. Happy Vacation! 🙂

    Comment by abitrade | February 18, 2011 | Reply

  7. sir, enjoy your vacation in Bohol.

    don’t miss to do snorkeling at Balicasag Island, it’s a good place for snorkeling–you could even see a good variety of fishes just by looking down to the waters from your banca.
    Dolphin watching is also great. These two activities can be done in one day, while the visits to historical places can be done within a day via car/van!

    enjoy!

    Comment by ricky | February 18, 2011 | Reply

  8. The best of times and the worst of times is finally here in the PSE. The market does not seem to know where it wants to go. Enjoy your vacation Sir Gus.

    Comment by Seth | February 18, 2011 | Reply

  9. I support you Gus! 🙂 Nevermind those that say bad stuff.

    Comment by marvin | February 18, 2011 | Reply

  10. Be well Sir Gus, you need this break. On my end, looking couple of months from now, interest rates are pressured to go up to deal with infaltionary forces. I’ll be praying that this will have minimal effect on the stock since part of the funds will be moving to the bond market…..

    Comment by Benson Lim AXA Life | February 18, 2011 | Reply

  11. Enjoy Bohol Sir Gus! Love the beaches!

    What does it indicate when the top buyers and sellers of a stock are the same? Why would they buy and sell on the same day at the same price?

    Comment by Kristin | February 18, 2011 | Reply

    • kritin:

      when a buyer and seller agreed to a price, stock and cash change hands. When a single or group of seller are selling off a large volumne of shares at point in time, the market value falls because the entire stocks looks for the last buyer with the highest price among the available bid to complete the sell off.

      Comment by Benson Lim AXA Life | February 18, 2011 | Reply

    • you have to remember that trading participants (TP’s or brokers) have a number of clients, each of which has an account.

      there are a few possibilities, i’d name at least two:

      1) the broker has 2 different account holders (clients) who posted the same price, one buying and other is selling. This would mean that the buyer and the seller came from the same TP.

      2) the TP got a big order, where they can play a bit and take a little risk and try to either push the price up or pull it down to maximize their earnings in the transaction/s.

      i could be wrong but that’s how i look at it.

      Comment by ricky | February 18, 2011 | Reply

      • Kristin,

        in the first place, how do you know who exactly is buying and selling? do you have access to that kind of information? if you are referring to brokers, it doesn’t necessarily mean that when the same brokers are involved in the buy and sell transactions of a particular stock that the same “individuals” are involved in those transactions.

        Example: First Metro client #1 buys 1B shares of ORE from First Metro client #2 who sells 1B ORE shares. In the screen, it would look as if First Metro is involved in the buy and sell transaction. 🙂

        Comment by roberth | February 21, 2011

    • Kristin,

      in the first place, how do you know who exactly is buying and selling? do you have access to that kind of information? if you are referring to brokers, it doesn’t necessarily mean that when the same brokers are involved in the buy and sell transactions of a particular stock that the same “individuals” are involved in those transactions.

      Example: First Metro client #1 buys 1B shares of ORE from First Metro client #2 who sells 1B ORE shares. In the screen, it would look as if First Metro is involved in the buy and sell transaction. 🙂

      Comment by Dan | February 21, 2011 | Reply

      • dan and roberth are one?

        Comment by ricky | February 21, 2011

  12. Enjoy Panglao, Sir Gus. No need to be weary of the market. I hope everything will get back to its favorable place in no time.

    Comment by Shan | February 18, 2011 | Reply

  13. hi sir gus! enjoy the beach!

    just curious, what kind of principles do u use to estimate on timing the market? 🙂

    Comment by cliffhanger | February 18, 2011 | Reply

  14. Enjoy your vacation. We were in Panglao last week and it was fun.

    Comment by John | February 18, 2011 | Reply

  15. Hi Sir Gus, have a great trip and happy weekend 😀

    Sir any comment from BDO? I just bought it too early 😦 though just a small amount.

    Comment by al | February 18, 2011 | Reply

    • Al,
      I think BDO is a good hold at this point. Nothing wrong with the stock. It’s the market that took it in the chin.

      Comment by Gus Cosio | February 22, 2011 | Reply

  16. I regularly read your blog and its far diff from others…it is well written and full of insights..its high time that others respect this space in consideration to those yearnings for info and directions..

    Comment by jack | February 18, 2011 | Reply

  17. Sir Gus…have a nice vacation. Take all the pomelo that you can and take some durian too no matter what the smell is. I have been reading technical analysis and tried to use it in my last trade. It did quite well. Most of the stocks I have reviewed showed sell or hold. Everybody seems waiting for signs what to do. Everyone seems very cautious. I believe this is the best time to buy since most of the stocks are quite cheap already as you said stocks are at the bottom.

    Comment by Gil | February 18, 2011 | Reply

  18. Hi sir gus, im enrolled in the 5th pse cce in ateneo which starts on march 1. Will you be one of the lecturers? Thanks

    Comment by Adnan | February 18, 2011 | Reply

  19. I look forward to your next post Mr. Gus.

    Comment by Trixie | February 18, 2011 | Reply

  20. RLC just indicated the price of the secondary offering. 10 for one share you can avail for every two in posession. It’s a good deal for the second largest mall operator in the country I think.

    Comment by jasper | February 19, 2011 | Reply

    • I’m quite new in the market….

      Based on your experience, when is the best time to buy share of a company who announced an SRO, is the day after it made the announcement, midway to the SRO date, or during the deadline?

      thanks and God bless!

      Comment by ricky | February 19, 2011 | Reply

      • If you are aiming for the SRO, then you should closely monitor the volume/price actions of the stock and time your entry. As the market is still in consolidation, the current price of RLC may still go down further. Alternatively, you may buy after the deadline of the SRO as the price level of RLC will adjust lower due to the issuamce of additional shares similar to MBT.

        Comment by Ralph | February 19, 2011

    • Hi Jasper, perhaps you could site some figures why you think it is a good deal. At P10 and the additional shares to be issued, what would be the 2011 P/E. Would EPS still enjoy any growth even with the 30% dilution?

      Comment by Garver | February 21, 2011 | Reply

    • jasper,

      i agree with Garver. your statement seems to need more substance: like at least tell us some numbers:

      Current outstanding RLC shares (A=): 2,729,220,457
      Current price per share (a=): 13.1
      1:2 SRO shares up for grabs (assuming everybody subscribes) [B=]: 1,364,610,228
      Price per SRO share (b=): 10

      Total outstanding shares after SRO shares listed (A+B=): 4,093,830,685

      Estimated price after SRO (Aa+Bb/(A+B) = ): 12.07

      That’s why I love numbers! And I predict I get more thumbs down again on this post than thumbs up. Haay.

      Comment by cliffhanger | February 21, 2011 | Reply

      • just to let you know, i am the real cliffhanger, and i didnt make that comment. but good display on numbers. nice to know that there are a lot of people doing that 🙂

        Comment by cliffhanger | February 21, 2011

      • nice work cliff. keep it up.

        stockholders who won’t subscribe have a good chance of the market value of their shares go down a bit.

        of course, it’s not a sure thing that the price will stay to be at that diluted level of P12.07 as in the case of BPI last year.

        That’s why the stock market is really so unpredictable.

        Comment by ricky | February 21, 2011

      • yeah, thanks cliff for clarifying how the calculation goes… of course, the current price of RLC could still fall below 13.1, in which case the diluted share value could be lower than 12.07… however, the diluted value is still above recent book value of 10.08… so jasper might have a point that the SRO shares being offered have good value simply because at a price of 10 a piece, that makes it less than book value. but the end result of about 12.07 is still a premium over book value so this SRO thing can be really tricky.

        i guess the real value would come if after the listing of the SRO shares the share price does fall down closer to 10, in which case interested investors who have no RLC at the moment just need to wait for the listing of SRO shares before buying from the market. just my opinion though.

        P.S. I used to see a comment from sir gus but it was deleted; im wondering why?

        Comment by mike wallace | February 21, 2011

    • @ mike wallace,

      i actually read the post you were referring to and it’s no longer here.

      makes me wonder if somebody could pretend that it was sir gus who posted the comment, and then when sir gus saw it, he deleted it since he was not the one who really posted it?

      Comment by ricky | February 21, 2011 | Reply

  21. Sir Gus,
    Do you have any idea about nikl and smc ? thanks… and God Bless

    Comment by MARLON | February 20, 2011 | Reply

  22. enjoy your break away from the markets sir Gus. Eagerly we await your wise insights soon.

    Comment by mike wallace | February 20, 2011 | Reply

    • Me too, I just open my computer now, sunday, 2PM, to look for Sir Gus new post, I am not surprise because I know he’s on vacation while at the same time hopeful that he can spent 5 minutes to write his thoughts… Be well Sir Gus….

      Comment by Benson Lim AXA Life | February 20, 2011 | Reply

    • I guess we just need to wait until the annual reports are disclosed. More power, Sir Gus

      Comment by roberth | February 20, 2011 | Reply

  23. im watching and waiting…..nasdaq near 10 years high..dow 2 1/2 years high….

    Comment by rene | February 21, 2011 | Reply

    • rene, least you expect it the market would start moving out of the range by the time you get tired of “watching and waiting” 🙂

      Comment by jasper | February 21, 2011 | Reply

    • I wonder who this jasper is — this is not me.. Someone really is posting using different names 😦

      Comment by jasper | February 21, 2011 | Reply

      • well, maybe he is just another jasper.
        but knowing that there’s a jasper who’s been posting here, he should have at least put something to be different from you, say he used jasper1 instead…

        unless he was really pretending to be you…

        hope word press could put additional safety features like require every unique poster to have an assigned code so that cases like some people pretending to be somebody else can be avoided….

        Comment by ricky | February 21, 2011

      • there actually is a way to tell one poster from another… look at the patterned icon to the left of “Comment by…” if that is different between two characters with the exact same name, then they are both different 🙂

        Comment by mike wallace | February 21, 2011

      • @ mike,

        actually, word press has a limited number of icons to choose from, and i think it randomly assigns an icon to a poster (who is required to provide an email or a website)…

        if a person knows one’s email address (example jasper’s email), he can post and pretend that he is the other person (jasper) when in fact he is not.

        Comment by ricky | February 22, 2011

      • thanks ricky,

        but I am quite careful about this. in fact I always try to write my email address (if I needed to) as \’xxx at xxx.com\’ to avoid webspiders from ever mining my address with the usual \’@\’ symbol minus the spaces

        Comment by jasper | February 22, 2011


Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: