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Philippine stocks are expensive

Early warnings from experts Last 26 July 2011, PDI published an article quoting market investment guru Mark Mobius. Mobius said that local stock valuations were now high compared with emerging market peers. That was in July last year. At the start of that month, the Philippine Stock Index (PSEi) was in the low 4,000s. The market didn't look back and zoomed up, convicingly past the 6000 mark in February of this year. I'd be very careful if I were going to buy Philippine stocks any time soon. Nomura, a top Japanese bank has a good explanation of why Philippine stocks are expensive. Click here to read about it.

My pick for the moment: MWC

I don't like over thinking. Utilities are good business, period. Timing, though is important in trading so I like to consult with technical analysts. The resistance for MWC was pegged at 25. Since it broke above it today and closed at 25.3, I would recommend buying it first thing tomorrow if you haven't done that already.

I wouldn't worry about Europe

There's always a few major things that push world stocks up and down. What's in the spotlight now is the Eurozone. The doomsayers forecast the end of the Eurozone with Greece and Spain being the first two who will fall out. There are also grave fears of a default by Greece and Spain as well as by their banks. I wouldn't worry too much, though. I am happy that there are doomsayers even though I don't agree with them. I think they play an important part because the world needs to hear what they are predicting. Their dark words will play a part in preventing it. Europe and all those heavily invested i.e. Germany, will not sit idly by and let things go crazy. Those with interests to protect will move. CNBC analysis argues that only political union can solve the problems. For me its simple, if Eurozone is pulled apart, it makes no financial sense to anyone even Germany who has benefited so much from the Eurozone. Unless there's some unforeseen political problem, the powers that be will think with their pockets and the Eurozone will be preserved.

PSEi at 5000++

The Philippine Stock Index has been pushing to new heights this year and closed today (June 3, 2012) at 5300.14. Who would have known it would happen now. Two years ago I recommended the following: ICT (28.50) ATI (5.3) MWC (15.25) SECB (63.00) The same stocks closed today at the following prices: ICT (75) ATI (9.80) MWC (25.3) SECB (142.2) With perfect hindsight, this would have made anyone a pretty penny over two years. With ICT and SECB, one would have doubled his or her money easily. However, at the time I recommended it, I couldn't predict my picks would double over two years. In fact, I sold of my SECB once I gained 25%. I was happy enough with the gain. Yet, seeing it move even higher made me cringe. It's very easy to predict which stocks will eventually go up, it's just so hard to say when. Common sense trading is easier for those who have time on their side. Stocks move up, we just can't choose when. It's having the power and emotional tenacity to wait that will bring success.

SECB: where did this all this come from

Around March this year (2010), SECB was hovering around the low 50s. Now, its parked itself in the low 60s, about 20% higher in just four months.

I was very happy watching the performance of this stock but am still a bit perplexed as to how and why it's beating the other banks. BPI for one has been a bit disappointing to me. Before the last recession wreaked havoc around the Globe, BPI was trading above 60. Now, it doesn't seem like it will return to the level any time soon.

There's a similar story for BDO. It's still significantly far from where it was before the global recession.

So what's with SECB? It appears that their loan growth has been strong and will continue to be very strong. Their current projection is 10%-15% loan growth in 2010.

My broker tells me that even a conservative estimate of less than 10% loan growth shows that SECB provides good value for the buyer even at a price of Php63.00.

place your bets!

place your bets!

"Place your bets!"

That's what Miko Sayo of Tsupitero.com says about the PSEi.

He said we're in some kind of no man's land because of the mixed signals of the market from a technical point of view.

Here's what I'm considering:

ICT (28.50)
ATI (5.3)
MWC (15.25)
SECB (63.00)


Here's a few reasons why:

I'm always partial to relying heavily on fundamental analysis and the fundamentals of these companies are very good.

I like companies that are engaged in businesses that are easy to understand.

ICT and ATI in particular because of the improvements in container traffic. If not for the recent trouble in the euro zone, I think these stocks would have hit the roof by now.

MWC because they enjoy a guaranteed rate of return as a utility company and the rainy season is coming. With el nino out of the way, MWC will be smiling.

SECB because they're numbers are just plain awesome.

Finally, i verified these picks with information from my broker. The most common sense tip of all: ask the experts. :)

cheers to the Philippines

After having a relatively uneventful and peaceful election, with a clear Presidential front runner, the Philippines has yet another thing to be very happy with.

7.3% GDP growth in 1Q2010.

Pretty cool. It was enough to bring a tiny rally even as the market was weak early yesterday.

spooky figures

The DOW is down 4% in 2010.

During the last session, DJIA fell 2.61%;
NASDAQ fell 2.99%;
S&P 500 fell 3.11%

CNBC reported a "brutal selloff".

The PSEi has a tendency to track the american market so we're likely to see another correction. What has my attention is the 10,000 point psychological mark in the DJIA. For a few moments before trading ended it fell below that level but quickly jumped back up to settle at 10,002.18 points.

If the DJIA doesn't hold above the psychological 10,000 point mark, I think there's a good chance it will spark a large correction in the three major indexes.

A large correction in the U.S. will probably spook the Philippine market into a sizable correction as well. After all, we've seen a rally that lasted around nine months already. As the saying goes what comes up, must go down.

Getting ripe for the picking

"Stocks post worst decline since August ’09" @ inquirer.net

It was reported that: Heavy selling cut 2.4% off key price index. The report used the word "bloodbath."

Miko Sayo of tsupitero.com says that Feb - Apr is normally ugly for the market. I guess this is a fitting start.

I wouldn't be surprised if the "ugly" Feb - Apr period extend a bit due to the May 2010 elections.

For those looking to start some long positions, the prices for entry are getting better. I wouldn't jump the gun yet, though. I'd wait for a no-brainer entry point.

2010, the year to buy

2009 saw a long rally of the stock market and yet it felt all too soon for me. So I sat on the sidelines and tried to put together a small stash of money from the bonuses I get from time to time. In hindsight, that decision seems to be getting better and better.

2010 seems like it will bring good buying opportunities for long positions.

Now, we have the real information with regard to the financial figures surrounding the recovery of the global economy at hand; and we also have the ability to think outside of the euphoric charm of the reversing recession


"Be fearful when everyone is greedy and be greedy when everyone is fearful" -Warren Buffet

I think the 2009 rally of the PSEi was a bit premature, i think people got greedy. Now, the numbers are in the red and it's spooking a few folks.

However, if we look at the fundamentals of Philippine companies, there are a lot of good ones out there. Now that the trend of the PSEi is a bit more sober, we'll have time to do some cherry picking.

Oh yeah, there's also an election coming. Local and national. That kind of political atmosphere always seems to bring stock prices lower.

When recession turns into recovery

Will the U.S. economy's recovery be good for the Philippines?

The Philippine economy performed well during the crisis, will it do even better during the recovery? I would hazard a resounding yes. Here's why.

1. We'll see an increase in demand for minerals
2. Our Business Process Outsourcing Industry will remain strong
3. OFW remittances will keep on growing

Number two and three, BPO and remitances, are the reasons why we are doing relatively well during this global financial/economic crisis. Those are no-brainers and have probably already been priced into the market.

Number one is what will shake things up. When demand for minerals increase, mineral rich countries like the Philippines have a great opportunity to make good money.

What does all this mean for common sense traders?
The languishing mining stocks will return to the new horizon. Before this global crisis, mining was under a spotlight. When the world pulls out of the recession and begins its recovery, I forsee a strong and steady increase in the value of local mining shares.
____________

Note though that PX is is oversold at its present nine-ish price. This is probably due to speculation over news of a new investor coming in.

a beautiful picture in hindsight

The past few months have been great for the PSEi. From 1745, the index climbed all the way to 2626 in the last three months.

That can make a lot of people excited. Not me though.

The obvious conclusion is that gains like that are NOT sustainable. I don't have to whip out my calculator and formula book to figure that out. This index cannot keep this pace up. As we haven't seen much of a correction yet, I think its coming. Soon.

Time to sell. Time to hold. Not a time to buy.

gmanews: RP bourse outperforms ASEAN stock markets

This is interesting. According to GMAnews.tv, the PSEi has done better than its neighbors. This really speaks well of our fundamentals.

Click here for the full article.

is it time to buy?

Markets around the world have seen good gains over the past weeks specially in Asia. When the numbers are in the green, there is always a lot of excitement generated. So with everyone wondering if its time to buy, i can't help but wonder the same thing myself.

I don't think its really the time to be buying quite yet. I would recommend that we still be cautious. I'll maintain my current strategy of small buys stretched over a long period.

Too much excitement
It's been a while since we've seen good numbers and I think this might cause the markets to get ahead of themselves. So far, the PSEi remains very responsive to the U.S. indeces so I remain attentive to what's happening over there. While the so called "green shoots" are emerging from the devastated American Economy, I don't think all the bumps are already behind.

Credit Card fallout
One thing I'm very concerned with is the Credit Card fallout that is hanging over the American Economy like the sword of Damocles. Even without very detailed specifics, we know that the American consumer uses credit cards for a very large part of their purchases. When a job is cut, credit isn't. So what happens when the droves of jobless start defaulting. We'll again see some ugly figures and have to digest them. It may not be such a big deal from a macro economic point of view, but something like that can really rattle the markets. It's coming and I would like to wait for that to pass before I make some big buys.

Waiting game is coming to an end
Over the past months, I've read and read and read about whether its a good time to buy. Most articles say the same thing. There is tremendous opportunity now. Timing and selection is the key. That kind of vague advice isn't really very helpful when it comes right down to making specific purchases but considering that around November 2007, the chorus of the blogosphere was sell, sell, sell and that the experts were saying similar things makes me feel good even about such vague advice. I sense that the time for waiting is coming to an end. The window of this "tremendous opportunity" will soon close.

is it a breakout?

When the index finally woke up from its sideward slumber, did it indicate that it was ready to trend upwards?

I'll leave that answer to the technical experts. See tsupitero.com.

What tickles me now is that the good numbers of our index are inebriating the investing community. Will it trend up? I don't know, but they're saying there's good chance.

when will it end?

The index may as well be a straight line. The trend has been sideways for so long, it's getting boring.

I guess we can just be glad we're not seeing the market values plunge like it is for most of the developed world.

"This will not be a good year but it will be more stable than 2008 and there will be occasional substantial bear rallies. Inflation is declining and another interest rate cut by the central bank is expected. " -Ron Nathan inquirer's "bearbull"

U.S. indeces take a tiny drop while Japan takes a beating

While U.S. market indeces took a few steps down, Japan's market dropped a whopping 4.8%.

The PSEi inched down and settled a mere 1.79 points from yesterday's close after ever so briefly punching past the psychological 2000 level at around eleven this morning. 

The dow was down 1.46%, the nasdaq by 2.09%, the s&p by 2.26%.

fuel for thought

A blogger named Steve Austin (of oilprice.net) wrote:

"It took only 5 months for the price of oil to plummet from $150 to under $40 in the second part of the year. Meanwhile oil consumption did not even decrease 10%."

If he has his facts straight, then the oil price will be back with a mighty vengeance. The low price is necessarily negatively affecting production capacity. Supply will keep going down at these low price levels.

He also said that oil is now being sold below the cost of production. That adds another dimension to the bad news for oil consumers. This means that many of the relatively small players will close down and the ones that survive will have less competition. Less competition puts less downward pressure on the price.

Let's enjoy this happy breather while we can. :) Hopefully by the time oil starts to surge we'll have more energy options at our disposal.

PSEi
As energy prices affect the outlook for stock prices, we should be mindful that the current strength seen in the PSEi is still very vulnerable. The low oil price is one of the factors that has allowed the market to climb back ever so close to the 2000 level. Let's not forget how devastating the oil price can be.

Oil was traded recently at $42.30 (January, Friday 9 2009 - 03:20:17).