ouch! MER closes at Php61!

All the attacks on Meralco have not been kind to its stock price. This is a good illustration of how market perception is the main driver of the stock market. The fundamentals haven't changed yet, and even if they do, I don't think they will change much. With the stock price all over the place over the past months, I see only two major concerns, only one of which I find to be worth any serious thought.

The only major threats I'm considering are
1) government takeover 2) private industrial power supply.

Anent the first concern, it seems government doesn't really have that much determination to gain control over Meralco. I think it's because they know they can't really bring rates down by gaining control of Meralco. While they blame Meralco, I'm sure they know the real culprit for high energy prices in the Philippines isn't Meralco. As government doesn't have a reputation of effeciency, any rumor of a govenrment take over can send many investors scurrying away for a safe haven.

The second concern of mine is one that I believe is more likely and has great potential to hurt Meralco. Major industry players have hinted that they are considering supplying their own power. If I were in their shoes, I would seriously consider the same. If the large industries choose to supply their own power, that will significantly hurt Meralco's customer base. Industrial customer's account for a major portion of Meralco's revenues.

This stock hasn't failed to provide excitement, both the good and the bad kind. I doubt that will stop doing so.

Anyone looking for a risky bargain? Here is one. Remember this stock price was pushing twice it's value late last year. Since then, Meralco's profits have gone up.

-31.05 for the Psei @ Php2.3 Billion value traded -May 29, 2008

The composite index closed at 2802.22, May 29, 2008.

Looks like the demand for Philippine stocks wasn't strong today. Maybe Philippine investors are joining the band wagon and riding the bull market in oil. Hehehe.

the retreat of the oil prices

It's not retreating yet, but it will. Sooner or later.

CNBC's Keneth Stier thinks it may be sooner. He thinks oil prices may be nearing a peak.

I'm not sure if were near that peak, but I'm sure that the price cannot be sustained at these levels. People will adjust and adapt. Habits will change and the world's love affair with oil will fall from its current glory.

Here's a few reasons why i'm of that opinion.


Changing perception
On CNN, I saw a program citing interviews implying that Americans are starting to dislike their large cars and are acceding to a general opinion that oil will go up, not down in the long run. Keneth Stier notes that the road loving Americans have reportedly been driving fewer miles.

Adaptation
In Europe, a club called Street Car was invented. It is like a carpool on a grand scale. A very complex car-sharing system that is somewhere in between public and private transport.

Reality
It won't take an analyst to call this oil's bull market a bubble. Speculation is what's driving the price now. When the slowing demand starts to manifest itself more clearly through statistics and the world's supply catches up, the easy to spook speculators will pull their money out of oil and dump their hoards.

low trading volume continues

Only a total of Php1.5 billion shares were trading in the Philippine Stock Exchange today (May 28, 2008). The composite index went down by 22.71 points, settling at 2833.27.

Bummer. When is that rally going to come? All we seem to hear lately is inflation, inflation, inflation.

With commodities skyrocketing, wealth is moving from consumers to ____________? Apart from the oil producers, I wonder who is really getting rich nowadays? What companies are are raking in bigger profits. I want to know so I can buy their stock! :)

Merlaco stays in the happy hands of the Lopez Family

While I missed the details, I'm happy to hear that Meralco is staying in the happy hands of the Lopezes.

MER's closing share price today was Php60.00. Good bargain I think...

low volume, MER takes the spotlight

Light trading
Trading was very light this 26th day of May. Only Php1.67 billion worth of shares were traded this first day of the week. The PSEi went down by 8.76 points. But nobody seems to care about that.

Spotlight on Meralco
The trading community seems more interested on how this whole Meralco thing pans out. Winston Garcia has been taking pot shots at the Lopez family and how they are managing Meralco. He blames them for the high cost of energy.

One word against the other
So far, I find the Lopezes to be a lot more credible that Winston Garcia. I find it hard to believe Mr. Garcia. Just earlier today on the news, he said that the Lopezes are trying to get him out of Meralco's board. That statement alone is hard to make sense of as he claims GSIS owns a 25% stake of Meralco. Based on the facts available to me, this is what makes we wonder: Even if the Lopezes gain the entire 75% vote, they cannot deprive the GSIS of at least one seat on the board because of the voting system under our Corporation Law. In fact, they can probably get more than one, but I'm too tired to compute exactly how many seats they are entitled to right now. Even if they cheat, which we have no evidence of, they can not deprive GSIS of a seat. If Mr. Garcia wants to stay in, he'll stay in. Hence, until these things are explained to me, I'm under the impression that he may very well just be making noise. I hope he clarifies things so we can form proper opinions about the issues he's raising.

snapping the losses and resuming the rally already?

The market closed today (May 23, 2008) higher than yesterday's close by 10.70 points and settled at 2,849.28. I don't think this is very significant as the value turnover for the day didn't even scratch Php2 Billion.

My guess is that investor sentiment improved from yesterday as we saw U.S. markets snapping their losing streak. The composite indeces of the Dow, Nasdaq and S&P all managed to close in the green.

I have a feeling we'll track those indeces again tomorrow.