Investing in the Philippine Stock Market

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About the webmaster...

Christian Parlade is a college dropout from UP, which therefore makes him an instant presidentiable. He took up Business Administration and Accountancy and found the course distasteful. We believe the course reciprocated the feeling.

He has been fond of jazz since childhood and thus found his gradeschool years rather traumatic since no other kid knew the songs he knew.

On his spare time, he plays NBA Live and a few stock market games. He was a former BBSer and generally went by the handle 'Istuding'. He played Legend of the Red Dragon incessantly and consistently got the most lays. This game is generally blamed for his resulting moral degradation.

He is a budding environmentalist and is generally pissed with smoke belching, swerving buses as well as with the inaction of traffic enforcers.

He is also a budding writer, although he seems more comfortable vandalizing the works of others than creating his own.

He is perennially without money and is accepting contributions for his various causes...

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JUNE 6, 2000

Market Review The market clearly weakened following rallies the past weeks. However, the index still managed to eke out a 9.73 point gain, consistent with the market's positive breadth of 60 gainers and 43 losers. With the gain, the index thus hit a new month high, closing at 1562.38 as the country took a breather from all the bad news plaguing the country. Another catalyst for the rally were the 'encouraging' US employment figures released last week. With the slowdown in employment, fears of further rate hikes in the US were allayed. With such fears temporarily shelved, the peso likewise rallied for second day - hitting a low of 42.070 to the dollar - as has been the regional trend. In the equities market, beneficiaries of the rally include blue chip MERB which gained P3 to P69.50. In late May the issue hit a floor of P52, indicating a 33.6% gain since then. Property issues, which are particularly sensitive to interest rates had a select rally composed of FLI +10.75% to P2.06, C&P +10.64% to P0.26 and ELI +6.25% to P0.34. Trades were rather strong for a couple of second liners as well, such as MPC (+10.61% to P0.73), V (+5.71% to P2.22), BEL (+3.45% to P1.2), GLO (+5% to P15.5), and WEB (+5.71% to P0.185). MFC continued to outperform the market as it hit another all-time high at P780 after gaining P5 today. The issue is up 56% for the year. SLC on the other hand, momentarily weakend, falling P5 from yesterday to P640 after hitting its own all time high at P655 at the start of the month. From the issue's IPO late March, its price has appreciated 36%.

Market Outlook

While we certainly welcome the market's renewed strength, we would not go as far as to consider this the major rally that we have been waiting for. Instead we shall opt to wait for the indications given by individual companies to see how far the 'recovery' has trickled down. Furthermore, it remains to be seen how far the peace talks will progress granted that the MILF's seccession request will most likely be denied by the government. At least for the meanwhile, the violence seems to have subsided and consumers have set aside their panic, if the observed rampant malling is to be the gauge. To conclude, while we believe that the perceived slowdown in the US economy would allow both our stock market and the peso to settle at higher than month-low levels, the political risks on theside may sway investors' confidence at an instant. Exercise prudence in trading.

May 31

On Leave

I will still be on leave for the rest of the week, which means that I will be away from the market. Thus, please bear with the lack of stock market highlights for a while. Instead, try looking at the new portions of this ever growing site. I have re-designed all the others to give the sites a homogenous look. Check it out ok? I'm sure it will be worth your time.

May 21

Shaken not stirred

Almost two months ago, we were discussing the possible effects of the Mindanao kidnapping on the stock market. At that time, value turnover was still hitting P1.5bn-P2bn per day I believe, but the index had already begun its descent. Active issues then were PhilWeb, AJOnet, Vantage, Island Mining and few other tech stock wannabes. This coincided with the Nasdaq's own precarious fall from 5000+ to just 3000+ now. At that time, blue chips have long ceased to capture the attention of foreign funds. With the selldown of speculative issues to complement that, the market just dried up.

But we remained hopeful then because we believed that a first quarter rally would push through if the topline economic growth was assumed to have trickled down to corporate earnings. But then, day after day it became clearer that consumers have not recovered, that there is no income to spend. Meanwhile, in the periphery, what was then a one-week scapegoat for the market's decline, the Mindanao situation unraveled into a major drama that would soon affect the whole nation.

And to think we even tried to pinpoint which companies had presence in Mindanao, and therefore might be susceptible to the uncertainties of the region. Now that uncertainty is here in Manila as well. With no apparent reason nor heart, the money-greedy bandits have resorted to bombing malls - something that will clearly not benefit anyone. Intriguingly enough though, no one has claimed responsibility for this streak of bombings in the metropolis. Shades of Martial Law? Could the government be sowing fear into our hearts to prime us for such an action? Unfortunately, the government has not acted with such integrity or transparency for us to banish such thoughts. Remember the P500k bribe per congressman to have the Omnibus Power Bill approved? Such acts do not instill confidence in the government.

This crisis will not just end on a whim. There are too many factors and too many consequences for there to be a simple solution. There are side issues, such as the Malaysian abuse of our countrymen when the latter were deported right after the kidnapping done by the bandits in Malaysian territory. The Filipinos there were treated like animals as the report indicated.

In any case I concede, it will be a while until we see PLDT at P1000, SMC at P65, MERB at P120 or MBT at P300. And with the recent events, expect investors to shy away from the prominent mall stocks such as SMPH, RLC, and ALI.

May 19

That old feeling

I would like to greet my friend Haya who is celebrating her 24th birthday today. Hey girl, if you ever come across my site, call me ok? ;-) I would love to hear from you.

May 18

So wet yet so dry

With no respite from the peace and order problem investors stayed away from the market. The composite index dropped 12.69 points under considerably thin turnover of P539mn after investors got a scare from the bombing of Glorietta yesterday, just a few days after a grenade was lobbed at the perimeter of Camp Crame. Similarly, the peso continued its slide against the dollar, averaging at the 41.7+ level in today's trade, even as the BSP moved to quell the drop by raising its overnight rates by 50 basis points yesterday. The 50 basis point hike by the US Fed Board was likewise a primary cause for the BSP's move. Interest for stocks was minimal and selective with only 103 issues traded. Of those, almost 3/4 of the peso turnover were cornered by the top 10 most active issues. Companies with weak first quarter earnings such as PLDT, BPC and MBT were among the 10. TEL dropped P10 to P725, BPC by P0.40 to P4.45, while MBT closed unchanged at P218, although it opened weak at P215. Most attention was given to industry-chameleon BW Resources which recently announced its IT initiatives. This time around though, BW's speculative appeal seems to have diminished, as the issue's trading range for the day was just under 8%.

One of the biggest gainers for the day was Vantage Equities, which shall henceforth be referred to as iVantage. The issue notched up 7.69% to P1.68, a far cry from its P3.75 all-time high set last March, but still a cumulative 61.5% gain from its month low of P1.04. During the company's investors' briefing yesterday, the company outlined its vision for the six IT companies it acquired earlier this year. Basically, the company will have presence in hardware and software sales, end-to-end networking solutions, ERP implementation via Jupiter Systems' homegrown ERIC (which is like a local version of SAP), automated medical transcriptions and of course a portal. It remains unclear though how iVantage will take advantage of the respective companies' competitive strengths as it gave no indication that these ventures will be merged in any way.

Beware altophobics

Although no one has claimed responsibility for the bombing in Glorietta, Manila based people will have a mentality that the trouble in Mindanao has already crossed over. This would leave investors more edgy than they already are. Earlier today, another bombing was reported in Jolo which would only serve to highlight the geographically diverse pockets of terrorism that has suddenly become prevalent.

That alone would be enough reason for investors to stay away. Unfortunately, most listed companies were not blessed with rosy first quarter earnings. Furthermore, as of yet it is not clear if the currency slide will be tempered by the BSP's 50-basis point hike of its overnight rates partially considering the discrepancy between its rates and that of the banks. As the banks may not be able to raise rates, outflow of money may continue. Technically, the support of the index lies at 1450. There thus remains reason and room for the index to fall.

May 15

On SMC and Coke

Even as the market finally breached the P1bn value turnover mark in what seems like weeks of listless trading, the index pared most of its technical gains last Friday, dropping 22.22 points today. We do not see this though as renewed interest or fear of the market since trading volume was basically cornered by a few issues. Of the 107 issues traded, SMC and SMCB were the most actively traded, with value turnover of P479mn and P186mn, respectively. The aggregate took almost have the value traded. SMC dropped P0.50 to P51 while SMCB closed unchanged at P52. We trace the large interest for SMC shares to its recent announcement of 1Q2000 results last Friday, but even more to the company's plan to re-acquire CCBPI shares from CCA, thereby regaining for SMC control of CCBPI. We recognize the strategic fit of CCBPI with SMC given that the former was once the cash cow of SMC. The timing seems right for SMC as well: with Coke in the midst of a restructuring process, SMC might be able to reacquire its former stake at a cheaper price than when it was sold then.

Apart from SMC, only PLDT and BW were traded with significant volume. TEL dropped P30 to P765, even as its ADR remained steady at $18 15/16 or about P786 last Friday. The drop thus brings TEL back down to the P765-P785 price range where the issue has been trading since the start of the month. BW on the other hand dropped 3.92% to P4.9 after being in the "win" column for most of last week. From a low of P3.80 last week, BW earlier peaked at P5.50 or a scorching 44.7% gain, before finally succumbing to selling pressure to close lower. Action for BW was revived after the company announced that it was currently in talks with three foreign investors in the company's pursuit of IT ventures as well as tourism.

Gloomy like the weather

With weak corporate earnings for the first quarter of the year, the market seems headed for lower ground in the coming days. Warranted or not, investors will no doubt look into the decision of the US Fed on the 16th as well as the status of the Mindanao crisis. It would seem that the BSP is expecting a 25 basis point hike in US rates, but a 50 basis point increase might convince the BSP to likewise raise its overnight borrowing and lending rates lest the widening gap in US and local yields put more pressure on the Peso. With the recent bombing of the Camp Crame perimeter, investors even in Manila will be a bit edgy as it becomes apparent that the crisis can still escalate. Gosh I shudder at the thought that those bandits will be in Manila.

Here's a thought. Yesterday I watched a show at the Abelardo Hall where the theme was "celebrating life." It was refreshing move considering how the value of life has been cheapened by current events. Maybe they should inject some of that optimism to the stock market.