Hollywood-ish news
News of what happened to the Senate's witness on the NBN deal is dominating the clicks on inquirer.net. The Inquirer's front page told of a story that I think belongs in fiction. Lozada was intercepted at the airport even before he made it through the tube, taken by men and made to sign documents saying it wasn't an abduction. His hearing started around 10am today, and I've been following along through inquirer.net's running account.
Another sluggish trading day
The total trade value today was slightly less than yesterday, being just below the Php1.2 billion mark. Modest gains left the market at around 3241, up by about 17 points from yesterday.
Waning interestin RP stocks
Business world's headline for today says that: "Interest in RP stocks wanes" . The article highlighted some important statistics.
"THE STOCK MARKET got off to a shaky start this year, with net foreign selling hitting a record P11.59 billion as foreign investors exited emerging markets.
January’s net foreign selling eclipsed the previous high for a single month of P9.4 billion set in October 2003, the Philippine Stock Exchange (PSE) said in a statement. "
Where does that leave us
I remember a broker telling me sometime last year that foreign buying accounts for about half of the buying that happens in our exchange. If foreign buying is on the way out, that leaves a large gap to be filled by local investors. I'm not too worried about it though. Here's why:
1) I don't think foreign interest will be on the wane for the entire year.
2) For the time foreign buying is low, there remains a good opportunity for us local investors to build a better portfolio by adding into our positions and taking advantage of potentially great bargains.
3) Philippine fundamentals for both the private and public sector remain good.
4) The worries of the foreign investors have more to do with the Americans credit problems and weakening consumer spending rather than problems within the Philippines.
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3 comments:
hi, i like what i'm reading. do you think its better to enter the market when the foreigners are out or just follow their lead?
hey salve, that's a great question. Here's what I think:
Generally, Yes, but not for the faint hearted and impatient. It makes for a good medium to long-term strategy if its well thought out and researched. Note that there's a huge caveat. Two main points.
1) Don't dare to do so, unless you are well informed.
2) Be ready to wait. This strategy is a double edged sword
Discussion:
1) Re: being well informed
a) the creation of bargains: As long as you're sure about the stock's value, then I think its a good time to buy when foreign buying is low. Foreign buying adds to the competition among buyers and pushes prices up.
b) computing the value: Without foreign buying we may find more bargains. But the tricky part is knowing the value of the companies. That may take some serious pencil pushing and number crunching. Luckily there's plenty of people doing that out there already, like brokerages and the business media.
c) the goal: We'll have to sift through the stocks to see which ones are "cheap" but have good value so we can avoid the ones that are "cheap" simply because the companies are no good.
2) As re: being ready to wait
a)few buyers means a time for easy buys but also a time for hard sells:
When foreign buying is low, people rarely want to buy. You may get good value, because not many other see it. But that same advantage may be your undoing if your not patient when looking for buyers. Big rallies in our market happen when foreign buying is high. When that will happen is something hardly as easy to determine as finding out which stocks have value.
b) relatively longer-term strategy:
The constraint in buying like this is that it could possibly entail a longer term. This won't work for short term trades.
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