INS & OUTS & WHAT ABOUT
Investing in the Philippine Stock Market provides a mixture of news, commentaries, theories and even investments-related humor. Economics, politics, finance and of course equities are the most common themes. The author dabbles in technical analysis about once a year. This site has been in existence since 1999. It was not inspired by the Asian Crisis and did not cause the Tech Fallout in the ensuing years.
This being a personal site, the author takes numerous liberties in discussing non-market activities and issues as well.
Indulge me. Do a Google search on Philippine Stock Market after you finish exploring this site. ;-)
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March 11, 2001
I'm afraid so. I've just transferred buildings and right now, I really don't have Internet access in the office. And that is why I haven't been actively updating. Well the truth is, you're not missing much anyway. Basically, volumes have fallen to record low levels again. Does this mean more confidence in Erap then than in GMA now? Perhaps not. At the time when the market volume swelled, rumors persisted that SSS and GSIS had a hand in supporting the market. Well, just last week the former heads of those agencies admitted that Erap coerced them to buy Belle shares. That's just one instance of course. So now we see just how much trades we can get without the GFIs. Not much it seems.
As for buy and sell tips, I would say PLDT is nearing a good buying window. If it closes down around P30 week on week, then we can start picking up the stock. It would then be poised for a technical recovery. Upside could be more than P100. Likewise, wait for ION to drop to around P12. If it happens this week, I think I'll buy a couple of shares. There might be significant attention on these two stocks in the coming week because most of the other index stocks still need to correct. Thus bargain hunters may just eye these two. I would also recommend a trading sell on JFC. It could drop to around P11 with its current correction.
While I shall try to update this site as often as possible, I would also suggest that you join the discussion list. In that way, you will also receive timely inputs from different stock market players. Check out the February 27, 2001
Oh my apoligies to all of you for not having been able to update the site more often. There's just been much work I suppose. Not really official work, but work on my http://findmeworkinthephilippines.blogspot.com site. Sorry for the plug. ;-)
Well here in a nutshell is what has happened the past weeks. The market went up of course because of the flurry of rate cuts by the BSP. The BSP in turn was just following the US Fed. Now the BSP has adopted a loose monetary policy. I believe Buenaventura's target for its overnight rates is about 9%. Now, what will make that possible is a good inflation figure and continued cuts by the US Fed, as well as a stable if not strong currency.
The point there of course is that low rates will help the still struggling domestic companies, specially after the fourth quarter shock of last year. Remember, a lot of companies are still in a layoff mood. Why? Well just look at the listed companies. The banks like BPI, MBT and EBC all registered significantly lower income. And these are the biggest banks with capacity for shock. Well in fact, I suppose apart from LTDI, SMC and ION, most other listed issues suffered for 2000. Just imagine the effects then on smaller capitalized companies.
Anyway, the low rates catapulted the property stocks like FLI, MEG and even SMPH. A lot of them doubled mind you. But did that last for long?
Nope! The main index is now on a downtrend. Technically, it should hover above 1,500 in the coming weeks. Fundamentally the political climate should provide some uncertainties to the market, with Erap trying to stage a comeback in both the legal and electoral fronts. The nerve! Tsk...tsk...But that's the fact of life. The truth is, some of his cohorts may yet win seats in the senate. If they grab majority of the house, that's disaster of course. So that probably means that this political overhang will be with us for a while. And to think that at some point, I personally believed that the PP2 magic may yet last 'til the elections. Sometimes it's disappointing how forgetful the electorate is huh.
So what should we do then? Well, I suppose technical trading becomes the option then. It's ok for us small investors since thin volumes won't affect us that much. But the big players will probably be out AGAIN in the meanwhile. Unfortunately, I really don't have technical picks right now. But let's see in a couple of days if some charts improve.
Meanwhile, if you have picks, hey I've created a message board where we can trade recommendations. Try out http://pub55.ezboard.com/fphilippinestockmarketfrm1. Nice transition huh? Happy trading!
There are three new things here at Investing in the Philippine Stock Market. For one, I have posted a BROKERS' DIRECTORY for those interested in getting contact details of the brokers of the exchange. I've also launched the RATE YOUR BROKER campaign. This basically aims to show to the public which brokerage houses have been performing to the satisfaction of clients, and which have not. If you trade or you know someone who trades, please do take time out to rate the brokers.
Lastly, I've also added a few stock market resources. If you want to catch up on your investment readings, take a look at these BOOKS.
February 1, 2001
No Ado about Rate Cuts?!
No it wasn't ex-President Estrada's continued claim to the presidency that caused today's decline. Had the statement been taken by the public as anything more than an Erap joke, we would now be at the wake of a dramatic collapse of the market. But the real decline is actually just a shade under 18 points, or just enough to negate yesterday's gains. The composite index thus settled at 1669.13. And it has been settling for the past week actually, trading just within a narrow 100-point band. And why is that? It seems like confidence in the market is still there, but it just needs a rest before another run. A fact mitigating this thesis is that average value turnover in gaining days has outdone losing days by about P250mn. This is very much apparent today, as turnover just reached P578mn.
In the past weeks, there has also been considerable second-guessing of the moves of the US Fed. With last night's widely expected 50-basis points cut, markets across the region merely shrugged. While it has happened in the past the markets jumped ahead on the mere basis of expectations, it would also be valid to say that the sentiment for correction remains stronger. Apparently, it was not just in the Philippines that banking and property stocks had a field-week following the US Fed's successive rate cuts. So let us not fret if the markets under-reacted to this particular cut. This is a healthy correction that will let other players into the market.
But then this is just our observed behavior of the market. Where we think it will go is another matter, and that requires a number of political inputs. These first few months of the Arroyo administration is of course a test period. Whether reforms being demanded by the electorate will be fulfilled will play a large role. We would see this in government appointments, political will to criminally prosecute big names, and even in providing a fair investing environment.
The magic will still most likely be there until the May elections. Therefore we can expect more bounce in the market in the coming months. But whether this political honeymoon can outshine the potentially disastrous first quarter corporate results is still uncertain. There is however an expected rise in consumption because of the coming elections, so we might see a couple of plays among consumer stocks.
What this really all just says is that we can expect more upside from the market, but that will be brought about by hope and optimism more than by hard numbers. But either way, barring any Erapesque moves by Arroyo, we see the index settling above the Erap-era levels.
"And now some new stars..."
The market's rally is actually a day or two early. It acted ahead of the US Fed's meeting where it is widely believed that key rates will once again be cut. This in effect is a day for positioning, against expectations of a bigger rally in the coming days. But if this rally were sustained, then it would be an impressive run given that most issues are relatively expensive already. It looks like a lot of investors have noticed that too. Note that there are second liners now that are getting second looks from investors. One such issue is ICTS, which also has risen significantly in recent sessions. But it is only today that volume has picked up. ICT rose 17.74% today with over 53mn shares traded. Similarly, CBC trade volume has increased over 5-fold in the past sessions. It remains relatively unnoticed though, gaining "just" 25% in the post-Estrada era. RFM is another potential leader in an upcoming rally. Like CBC, it has risen just over 25% in the same period, but trade volume is also picking up. Today's 19.35mn shares are over 6x more than its average turnover. In the same league would be cash-rich JGS. In the same relevant period, JGS has risen by a shade higher than 21%. Today it was actually unchanged and closed at P2.6. It could still be subject to more investor attention in the coming weeks given that it is liquid, profitable and has seen much higher price levels in the past.
We'd like to focus a bit on SPI. This exporter of services has performed as well as the market, except that its rally has been more gradual. It's impressive because it has been consistently closing at its high. Today, it touched P11.50, which would be its 7-month high, but encountered a bit of selling pressure. It thus closed at P11.25. At P11.50, there was a prolonged period of consolidation of this stock, thereby implying strong resistance at this level. It may be time to take profits in this stock.
Let's look at PCOR. This issue which shall be remembered for its blockbuster IPO has performed miserably in the past two years, coming from a high of P6 in 1999 to just P0.98 near then end of 2000. Within the Arroyo era, it jumped gloriously by 58%. Today it closed 2.15% to P1.9. As we know, the stock has acquired an almost indelible political color, especially in the recent period of rising oil prices. Now that the OPEC has moved to cut production again, the pickets may not be far behind. Had you bought your shares anytime in the second half of 2000, you would have made a couple of bucks on the stock. Encash it.
An issue that has performed uncharacteristically poor is GLO. From P680 last January 19, it just managed to jump 14% to P800. It then steadily declined to just P725 today. As one of the few profitable companies in 2000, this may be unwarranted for Globe. Remember EDSA II where text messages swelled to over 150% of usual? With elections coming up in May, we believe there will be a prolonged period of heavy text messaging, focusing mainly on cyber-campaigns, which of course will be beneficial for Globe.
The stock market went on a decisively corrective move, without the last minute buying apparent yesterday. Today it's just basic profit taking as has been expected by most analysts and investors. In fact, more than 60% of the issues traded closed lower. The correction thus cut across all groups of stocks from blue chips to just property stocks to aspiring tech stocks. How far can the correction go? Well there is a gap of over 100 points that the index chart has yet to cover, so that's a possible target in the coming weeks. However, we can also argue that the index has been artificially depressed in the past months and that the gap therefore represents a change in fundamentals . In any case, what seems reassuring is that turnover was relatively low today, perhaps indicating the inclination of more investors to just hold on to their shareholdings, rather than grab quick gains. If that were the case, perhaps the index may just settle and consolidate above the 1,600 level.
In the continuing saga of SMC and Coke, negotiations continue although there have been a number of published studies that say the deal has already been finalized, with SMC once again taking control of Coke Philippines. SMCB rose 2.48% today to P62, or a 15-month high. The issue has been rising steadily over two weeks now, unlike most issues which had an overwhelming one-day run-up last Monday. Expect this issue to join in the correction as soon as tomorrow, although the next resistance level seems to be at the P67-P68 level. Thus a one or two day push by this issue does seem possible too.
Meanwhile, the Estrada cronies are now suddenly all up in arms against their former benefactor. With Mark Jimenez, Jaime Dichaves and Dante Tan all willing to testify against Estrada, expect a lot more under-the-table transactions to be brought to light. The string of events may also bring back political flavor into the stock market mix. Granted none of these shady characters are given immunity by the government, expect the investing public to react positively to such news. One wonders whether Lucio and Danding will also decide to take part in the fray. After all, Tan has been implicated by former Secretary of Finance Edgardo Espiritu while Danding has been theorized as a potential financier for a pro-Erap coup.
January 29, 2001
After the Thrill
There's still select buying of a few blue chips and second liners, but most traders are on the selling side today. After last week's 255.25 point gain, it was expected that profit taking would take place. The mood's still mixed though, despite a 21.90 point drop in the composite index. The drop is rather large although market breadth is just slightly to the favor of the decliners (40:55). And that's because index stocks bore the brunt of the selling. So now it's basically a combination of fund rotation and profit taking.
And what happened to the property and property related stocks that were flying high just a week ago? FLI continues to fly, gaining 3.64% to P2.85. DMCI gathers strength with a 5.17% improvement to P0.61. A number of property stocks remained in equilibrium as well, such as ALI at P6.9, UW at P0.42, and UP at P0.14. The rest succumbed to profit taking, along with the index stocks. These would include ELI which lost 1.96%, SMPH, -2.9% to P6.7, LND, -3.64% to P0.53, FD -4.41% to P1.3, CMP -5.13% to P0.37, and MEG -5.66% to P1. So do we believe that the property rally is abruptly over? Well, we do believe it's healthier to correct for a while in order to provide buying entry points for other investors. At the same time, it should build up the support for these issues. However, there may be one last push at the end of the week as the US Fed will most probably institute another rate cut, which will most likely will be followed by the BSP. That should provide a last minute push to the property issues before they consolidate.
On the speculative-tech side, we still have Philweb giving it another run, gaining 12.12% on the side. The issue closed at P0.0925, or just a shade off its intra-day high of P0.095. Since the start of its rally, the issue has almost risen three-fold, and with hardly any press releases this time around.
As for the deal concerning SMC and Coca-Cola Amatil, well there have been reports that the talks have already been concluded and that SMC will make an announcement regarding the share swap within the week. The reported deal would involve SMC taking over 65% of CCBPI in exchange for its 21.5% in CCA. However, Amatil denied this and said that they were still in the thick of discussions. Meanwhile, if you haven't noticed the mild surge of foreign capital, try comparing the relative prices of SMC's A & B shares. From relative parity in the Estrada crisis months, the company's B shares are now trading at a 21% premium.
As for the rest of the market, we believe it will correct until about the end of the week, where it may stage a mild recovery. Political concerns will eventually give way to economic prospects as the most telling signs. A wildcard however would be the reported willingness of ex-presidential crony Mark Jimenez to testify against Mr. Estrada. The market may take it either way depending on what he divulges.
January 26, 2001
We're back from whence we came. In the market's historic rally last Monday, the index closed at 1708. That's precisely where we are now after the index won another day, gaining 15 points on the back of strong buying in second liners and various property stocks. The story of course is a mix of classic rotational buying and property stocks benefiting from another rate cut by the BSP. Consider the following frustrating or thrilling statistics, depending on whether you were able to buy or not: in terms of relative performance, the property counter has beaten the main index by almost 5%. Not much you may think, but considering that the property index was underperforming the main index by more than 22% just last November shows how much property stocks have rallied since then. Look at FDC. The issue was brought to life right after Estrada was deposed. From P0.7 last January 18, the issue has risen over 94% already, closing at its high of P1.36 today. This does look like a very good signal for the market. If you take a look at the volume of trades, you would see that today's volume represents a fourfold increase against the 30-day average. FDC's subsidiary FLI generally follows the same pattern. In the same period, FLI has risen from P1.38 to P2.75 today. It also closed at its intra-day high and has achieved a 99.3% rise for the week. Had you bought FLI anytime after February 2000, you could have unloaded with a profit already. We can see that very same pattern in CMP. No, it didn't rise with the House attempts to nominate Manny Villar for speaker again. If you bought your CMP last Friday, you would have exactly doubled your money already. More importantly, interest in the stock has definitely picked up. We haven't seen this kind of transaction volume for CMP since mid-1999. But let's veer away from the stars from a while. A complementary beneficiary of property stocks of course would be construction issues. DMCI has been relatively quiet. In fact today, its turnover was just over P4.5mn. But what the figure doesn't show is that volume is already 2.7x its average. Within the week, the issue quietly gained 107%. Guess what? Even LND, which has been embroiled in a lot of controversies, including the Erap log cabins managed to gain an impressive 52.7% in the week. That easily pushed the issue to its six-month high. UP, which was once a darling of the market regained a bit of its glitter, gaining a good 55% within the week. Much like LND, the issue also boasts of closing at its 6-month high. From the looks of it, there's still some pent-up buying interest in the market. The strength is there, but the sell-off is also due. Perhaps by next week, we would see the correction finally materializing. For day traders, this would probably be your dream market. Our measure of volatility shows that the index hasn't been this volatile since December 1998. And that means there are lots of opportunities to trade. But for the more fundamental investors preferring buy and hold strategies, now would be a good time to unload for a while.
January 25, 2001
Looks like the market pulled off another surprise. For sure the composite index is at an overbought level already. Both the daily and weekly charts show 14-day RSIs greater than 70. A clear sign we believe. Nonetheless, the market did not correct today. Not only did it manage to hold on to its past gains, it chalked up 27.75 points to its credit. So why is that? Basically the rotation story that we explained yesterday still holds true. In fact, more than P250mn of the total value turnover of P826, or more than 30% went to non-index stocks. The most notable ones would be WEB, UW, SGI, FAIR and ELI. In fact, in the past four sessions, WEB has soared over 134% with volumes of over 4.5x its 30-day average. Thus, it's quite apparent that there has been a great degree of speculation on this issue, as well as a few others. Apart from its sterling press releases last year, WEB hasn't really made waves in the IT community, and in fact has quite a credibility problem. The company did announce thought that it would have an analyst briefing on February 8. Perhaps by then, the company will announce something solid. Similarly, another issue lacking in substance, but not in hype continued to bulldoze its way up. FAIR, which was more notoriously known as BW Resources (BMW to Justice Davide) gained another 10.77%. In the past three days, the issue has spiked by a good 50% already. There could be an angle there because the locked-up shares held by MEG have already been freed up, but its more likely just pure speculation. It surely can't be Dante Tan again since the public has its eyes on him, as well as on other Erap cronies.
Incidentally, Globe announced it entered into a five-year renewable contract with MEG to provide broadband services to hi-tech firms in Eastwood City. Globe apparently spent heavily on this project. GLO was down 1.274% today to P780. Nonetheless, that's still a good 14.7% above the closing price in the pre-euphoria stage of the stock market. MEG for its part crept up 1.11% to P0.91. It pales in comparison to Monday's P1.18 high, but still a remarkable improvement from P0.79 just last Friday.
Meanwhile, the rest of the market remained very optimistic. Out of 140 issues traded, 84 issues or 60% registered gains. While the rally cuts across all types of issues, there was a notable rise in speculative activity. There were more than 22 issues that rose over 10% today and a whole lot of them are third liners. Consider Wellex, Alsons, Omico and Polar as the top gainers for today. True, the speculative fever in the market seems to be back.
And so where do we stand? To borrow a phrase, we shall recommend according to the dictates of our conscience. Thus, by all means, if you have already profited then cash in. From a trading stance, sure weíll aid you in riding intra-day trends, but as a philosophy, we would recommend a general sell. Note that we say this despite a semi-general belief that the index may trek past the 1700 level. As weíve said before, hype must eventually give way to reality.
January 24, 2001
Basically the confidence in the new administration remains as the power behind the market. After a quick 45 point correction yesterday, the market rallied back despite being at an overbought level. The confidence benefited stocks across the board as 78 issues registered gains, compared to only 31 that registered losses. Twenty six issues closed unchanged. At the start of the day, it seemed as if the market would rally mightily again. At one point, the composite index was up 32.63 points from yesterday's close. However, perhaps feeling that the market will continue to correct, profit taking pared the gains to 3.13 at the close. The major players are still the blue chips, although there seems to be a lot more participation in other issues today.
The top issues for the day are MERB (unchanged at P59), ALI (+1.47% to P6.9), PLDT (-2.16% to P905), SMPH (-2.9% to P6.7) and AC (+1.19% to P8.5). Noticeably though are the surging volumes of second liners such as FLI (-2.75% to P2.12), PCOR (+7.06% to P1.82), MEG (+3.45% to P0.9), CMP (+2.86% to P0.36), ICT (+11.83% to P1.04) and FDC (unchanged at P1). It would seem as if fund rotation has already begun. In fact, a number of non-index issues also registered a surge in volume including WEB (+23.81% to P0.65), ELI (unchanged at P0.5), FAIR (+32.65% to P0.65), and UW (unchanged at P0.38).
Earlier today, BSP Governor Rafael Buenaventura reaffirmed his desire to cut interest rates some more, but to some extent will be dependent on the actions of the US Fed. At the Philippine Dealing System, the peso hit an intra-day low of P50.1:$1 yesterday. Today, the peso proved much stronger, averaging P48.18:$1 in the morning. With the current stability of the peso, a lot of analysts are actually expecting a rate cut of over 50 basis points of the BSP's key rates. The coup rumors, which caused the military to be on alert has somehow died down with the denial of several pro-Estrada figures that such a plot was taking place.
A report came out today that Rep. Joke Arroyo said that the new administration inherited a bankrupt government. This was promptly denied by Buenaventura who said that the treasury in fact has P130bn pesos. Arroyo made the statement in reference to the incredible budget deficits that the Estrada administration has been incurring. In a related development, Finance Secretary Alberto Romulo said that he hopes to achieve a balanced budget by 2004. He said that it will take that long just to counter the deficits incurred in the past years. This is of course a very reassuring sign, considering that the country's budget deficit has got to be the single biggest problem at present.
Meanwhile, the World Bank issued a statement saying the it hopes that the Philippine government will be able to root out corruption. That's positive enough news because it means that the international community is giving the new administration the benefit of the doubt.
As for the market in coming days, well we did expect a correction today so the rise was actually a surprise. While there may be freak days like today, we believe that the market will generally follow a logical pattern. Right now, the charts are saying the market should correct in the short term. We believe that the market is just being buoyed by investors who are still riding the new administration euphoria play. Reality will coincide with hype soon enough.
January 19, 2001
Rallies in and out of the Market
The market went on a technical recovery after declining for three consecutive days worth over 100 points. The 14.72 point rise was mainly brought about by foreign buying on select blue chip issues, such as Globe Telecoms which announced that its net income for 2000 increased by 65% to P1.55bn over the previous year of P940. The company also reported that revenues rose by 113.83% to P20.1bn from P9.4bn a year earlier. With the announcement, GLO's share price improved modestly by 1.49% to P680. Heavily traded stocks that registered gains would include EBC-PCI (+0.93% to P54), MERB (+1.05% to P48), ALI (+1.85% to P5.5), MBT (+4.12% to P177), (+2.90% to P7.1) and BPI (+3.45% to P60). Most of the said stocks dropped steeply in the preceding two days, as did the peso. The peso now trades between P44-P45 to the dollar.
Meanwhile, the rest of the country is embroiled in a rally fever, with both pro and anti Estrada camps staging simultaneous rallies in various parts of the country. Tension in inevitably building up as the two large groups may eventually cross roads, perhaps even as early as next week. Whatever happens then will probably determine the fate of the stock market in the coming weeks.
January 18, 2001
Two days after the prosecutors of Estradaís impeachment declared the proceedings a sham, the market closed another 20 points lower. Now in a three-day skid, the composite index is down an aggregate of 130 points.
At least the selling pressure has weakened a bit. Yesterday, the index registered an 8% decline, which paired with a P3 drop in the exchange rate were very telling signs of an economic crisis.
Even as the prosecutors lashed at the senator-judges for voting to suppress the truth, Cardinal Sin and ex-president Cory Aquino once again called on the people to fight the battle in EDSA. At yesterdayís rally where about a hundred thousand citizens attended, opposition leaders vowed to continue to fight in the streets until Estrada is finally compelled to resign.
Ernie Maceda who is the presidential spokesperson for the impeachment trial, pooh-poohed the move, saying that the protests will only last for a week. With this, the opposition leaders challenged the people to stage non-stop protests centered at the EDSA shrine.
Meanwhile, while the stock and exchange market suffered, a few select stocks actually benefited. Foremost of course is SLC which gained another 3.81% today to close at P1225. It has risen 13.95% during the past four sessions, once again demonstrating its effectiveness as a currency hedge. An unlikely issue to be rallying at this point is the beleaguered PTT. The issue gained a hefty 34.29% today, and an aggregate of 51.61% since the start of the year. Closing at P0.47, the issue is now at its 6-month high. There has not been any news for PTT that would prompt such reaction.
The same blue chips that led the marketís advance the past few weeks were of course the logical sell prospects. As such, SMPH fell another 6.9% to P6.4, thereby bringing its two-day losses to 15.625%. BPC for the same period has lost 20.29% and today closed at P3.45. MBT was likewise heavily sold down the past two days and lost an aggregate 13.26% to close today at P196. ABS which has also been very strong lately slid another 1.04% to P47.5. It lost 9.09% in two days. Finally, ALI lost another 1.82% to P5.4, bringing its two-day losses to 9%.
As for prospects, we believe that while the country is polarized in this manner, the marketís tendency will be to continue dropping. No need for any high-tech analysis to come to that conclusion.
January 16, 2001
Correction Your Honor
In today's market, buying tapered off a bit perhaps as some investors have already deemed most issues as overbought. Nonetheless, the performance was still good enough for turnover to breach the P1bn mark, which just a couple of weeks ago seemed very improbable. As has been for most part of the new year, foreign buying again exceeded selling, today by about P596mn.
Funds of course were still concentrated on blue chips, even as the top ten most traded issues managed to corner over 89% of total value turnover. PLDT was steady at P915, but most other blue chips registered declines. In effect, the market went on a technical correction, dropping 16.14 points. The rest of the market was also generally pessimistic, as losers outnumbered gainers handily, 49:19. Among the issues on the losing side were SMPH which dropped 3.13% to P6.2. SMPH has been one of the strongest issues as of late. In fact, the issue came fairly close to rivaling its year high. Performing just as impressively in the interim was MBT, which inched by 0.51% today. At its current close of P196, MBT is up 7.1% YTD and 17.36 from its December low. Another issue performing really well was ALI which likewise neared its year high. In fact today, it rallied initially up to P6.3, but faced intense selling pressure, causing it to drop by 3.23% to P6.
The market has been rallying since the start of the year generally because of the following factors: the strength of the evidence being presented by the prosecution panel in the impeachment trial of President Estrada, the falling world crude oil prices and the rate cuts by the US Fed and by the BSP.
However, the cuts by the BSP have taken their toll on the exchange rate. Today, the peso dropped to as low at P52.95:$1. The BSP claimed that it did not intervene in the market. However, the BSP did say that they would have to hold off on any more cuts, unless the US continues its rate cutting series.
Meanwhile, RCBC is reportedly interested in buying a stake in EBC-PCI. The latter bank stated that it was looking for a strategic partner who will buy a minimum of 20% to perhaps 35% of its outstanding shares. In the past weeks, the bank admitted heavy withdrawals by depositors following the bank's involvement in the coddling the president's bogus account. This eventually led to the resignation of erstwhile EBC chairman George Go.
Finally, the fact that the official budget deficit for 2000 exceeded its original target by more than 100% must have been a dampener for the market. Chalking P136.11bn, treasury officials were at once defensive that the deficit has already been funded, thereby not necessitating an increasing in domestic rates.
January 15, 2001
The market performed strongly today, gaining 26.28 points with very heavy volume as investors flocked to blue chips like PLDT. Whatís more remarkable is that counting last week, the index has gained an aggregate 98.85 points. The index has thus overtaken its previous recent high of 1563 set last June 2000. Thus, technically this was probably the reason the market had such an run-up. The market has broken through a strong resistance.
PLDT cornered P921mn of the P1.907bn turnover registered today. Other major blue chips also performed strongly, such as SM Prime which gained another 4.92% to P6.4. SMPH has been a prime mover in the marketís almost month long rally. Metrobank also gained 2.09% and is on the verge of the P200 level again. ALI, the other major issue that has led the property sector likewise gained 6.9% to reach P6.2. As it has been in the last couple of months, ALI has behaved very similarly to SMPH. On the other hand, MBT has paired with BPI to lead the banking sectorís rally. BPI rose by 4.20% to P62.
Our star pick, ION continued to resist selling pressures, despite being very overbought. In fact, it and resisted and more, gaining 1.61% to P15.75.
Meanwhile, the peso touched new lows, breaching the P52 barrier once again, most probably as an offshoot of declining domestic rates. The BSP has adopted a loose monetary policy in order to spur the economy and to lessen the burden on businesses.
Equitable Bank denied that it was undergoing a bank run, even as it admitted that it has been experiencing heavy withdrawals. The bank also denied that its major investors have been pulling out, adding that such has not been discussed in any board meeting.
The SEC said that it added 12 new brokers and 12 new individuals to the stock manipulators list in connection with the BW Resources investigation. The SEC reportedly has strong evidence and will file the case by next week.
January 12, 2001
The Underground Exposed
The market quickly regained its bearings after undergoing a technical correction yesterday. We actually expected that the index would continue to correct given its overbought position. But apparently, the BSPís 50 basis points rate cut seeded the market with a bit of optimism. As such, the main index rose by 25.76 points today supported by broad buying and slightly higher than average volume. At the end of the trading day, there were 50 gainers, compared with 23 losers.
PLDT, SMPH and MERB were the heaviest traded issues with a combined turnover of over P468mn. PLDT gained 1.13% to P895, MERB was unchanged at P54.50, while SMPH bounced back by 1.67% to P6.1. While the buying base was relatively broad, we note that most investors still opt to buy into the big blue chips, perhaps owing to the uncertainties in the political and economic climate. People are just playing it safe, even while in trading mode.
A complementary theory is that rate cuts would be beneficial to property companies which are deemed vulnerable to high interest rates. This is especially true since a lot of the property companies became heavily indebted because of the rapid expansion of such companies during the real estate boom of the early 90ís. The same companies were caught illiquid and unhedged during the 1997 Asian crisis. In any case, property issues such as FLI, SMPH, ALI, MPC, MEG, ELI, and JGS all registered gains.
As we have said before, investors are terrible myopic these days, buying and selling depending on day to day events. Apart from the rate cut, the impeachment trial must have provided some buoyancy as well. The testimony of former finance secretary Edgardo Espiritu surely strengthened the case of the prosecution. Espiritu alleged that Estrada was in fact heavily involved in the trading of BW shares. Former SEC chairman Perfecto Yasay Jr., also testified that Estrada tried to interfere in the stock market. He said that Estrada urged him several times to help our Dante Tan.
We stand that this hypothesis will hold perhaps until the conclusion of the impeachment trial. We also reiterate that there will be no long term trends for a while, because most investors have adopted short term trading strategies for lack of a clear direction in the countryís economy.
January 11, 2001
And so the market lived up to its potential as a pure short-term play. Today it succumbed to a second wave of selling pressure. It began yesterday when several major issues started reaching overbought levels, but then investors merely switched to second liners. It was barely enough though, with the index just gaining 2.33 points. Todayís wave was more potent, with only 19 issues posting gains, against 45 that posted losses. The aggregate result was an 18.26 point decline in the composite index. It could be interpreted as a technical correction or you could also see it as the index finding its equilibrium. After all we continue to allege that the index in the next year or so has nowhere to go but down.
After this short term correction, we believe that there are a couple of reasons to be on the buying side of the market. For one, the BSP cut another 50 basis points from its overnight rates that would unlock to the public more funds for investments. As the BSP is aligning with US rates, we can expect another round of domestic cuts if the US decides to cut another 50 basis points from its benchmark rates at the end of the month, which is expected by the market. Finally, the string of bombshell witnesses by the prosecution panel in the impeachment trial of President Estrada would likely shore up the publicís confidence, at least for a while.
Meanwhile, the good news regarding falling world crude oil prices may be coming to an end. Saudi Arabia has just announced that it will cut allocations to some Asian customers for February by 10%-12% from full contractual volumes awarded in January. This would be in line with the OPEC cartelís output cut of 1.5mn bpd. This would be bad news of for us indeed, as fuel prices have not even decreased by a peso despite the softness in the world marketís prices.
At this point, prudent strategy to employ would be to ride the short-term perception of the market. With the composite index breaching the 1500 level, we can expect a fair amount of selling. Sell along. Itís fairly hard to call a medium-term trend as trading is rather myopic. We can expect a tradable range of about 200-300 points for the index, depending on the turn of events, but streaks will probably run for a week at most. After all, long-term investors are still employing a wait and see attitude towards the market. We donít believe thereís positioning just yet. Right now, we have traders, not investors.
January 10, 2001
Riding the Waves
The market explored a rather broad 30-point range throughout the trading session, before eventually settling for a 2.33 point gain at the end of the day. Initially the market ran up by as much as 15 points, as if to continue the marketís two-day 62.74 point gain performance. Index issues that exhibited such buoyancy would include DMCI which shot up by as much as 17.24% despite its connection with Semirara Coal which is currently embroiled in the garbage controversies of Metro Manila. Another would be BPC which closed at its high of P3.35, or 9.84% higher than yesterdayís close of P3.05. A number of other second liners likewise got a share of the dough, albeit temporarily. PLTL jumped by 7.14%, ICT by 6.33%, PCOR by 6.15% and DGTL by 4.26%.
However, in the latter part of the session selling pressure began to exert itself. Investors, which have been content riding the wave likewise quickly pulled out once it became clear that the rally wasnít going to be sustained. It just shows that most investors are just in a trading mode. In the end, PLTL closed unchanged, ICT was just up by 1.27%, PCOR by 1.54% and DGTL closed unchanged.
The marketís darling performer of late, SMPH also had the same storyline for the day. It threatened to extend its rally via a 3.23% gain, but eventually succumbed to selling pressure, falling 1.61% to P6.1 at the end of trading.
We can attribute the marketís three-day winning streak to the cut in domestic rates by the BSP as well as oil prices. That of course is partially due to the freed up liquidity, and partly just hype and sentiment. We really donít see investors coming in on a longer term given our fundamentally questionable economy. In the near term, we expect more pronounced profit taking to occur specially on overbought issues like SMPH. If you rode with the buying wave of recent days, itís time to ride the selling wave as well.
Nonetheless, after a technical correction, we may yet see another rally as the BSP indicated that it may cut rates again. In fact, we may see that this Friday. The US is also expected to have rate cuts at the end of the month. We may see a funneling of these funds into the local market.
But after the liquidity play has been fully factored by the market, we do expect more lackluster weeks ahead.
January 5, 2001
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No More Free Rides
In the US, impulse buying in the stock market waned really fast. We were counting on a follow-through rally there for us to have a counterpart rally here. Without such, we were basically back to our lackluster trading habits. Surely the P301mn turnover wasn't enough to fill the trading floor with pleasant sounds of ringing. Even in the political and economic fronts, there weren't any breathtaking announcements that would have moved the index. Thus, without much stimulus, the composite index slipped 6.03 points. It's not much of a decline, but in terms of quantity of issues, those in the red outnumbered those in the green 34:19. Still the concentration of trades was in selected blue chips and Uniwide of course. The top ten active issues cornered 78.23% of the turnover.
The deal with Uniwide of course is still the Casino pullout. Too bad for UW. We checked out the track record of Casino and found it rather impressive actually. Nonetheless, there was a report that came out that Casino was still interested in investing in the country, even if not it Uniwide. So who could be the potential beneficiary? SM Prime? Ayala? Robinson's Land? Maybe even Philippine Seven? Well right now, that's all speculative. Over at Uniwide's side though, the company said that Casino might have had second thoughts because of the risky political environment. UW's descent continued, losing P0.03 or 9.38% to P0.29.
Meanwhile, the NSO reported that the inflation figure for December was at 6.6%. This was higher than the consensus of a poll prepared by Reuters'. The Food, Beverage and Tobacco group as well as Fuel, Light and Water registered notable increases. So to a degree we can say that the higher inflation was due to the excellent performance of the agriculture sector in 1999 which kept food prices down. At the same time, major increases in fuel prices also figured into the equation. The tragedy here is that consumption continues to dip even as we expect more supply-driven inflation.
The Philippine Institute for Development Studies reacted to a comment by Raul Concepcion that about 100,000 workers may be laid off starting this quarter, owing to the dismal economic environment. The group said that companies may just opt to shorter working hours rather than resort to lay-offs as was done by several companies during the 1997 currency crisis. Concepcion said that six companies already informed him of their plan to switch to four-day work weeks.
Erstwhile Equitable Bank chairman George Go clarified his earlier statement that P32bn has already been withdrawn from EBC-PCI in the recent weeks. It should be P3.2bn, he said. EBC dropped 2.73% to P53.5.
January 4, 2001
In a sentence, Philippine stocks rose because of the US Fed rates cut. In a surprise move, Alan Greenspan and company decided to cut US rates by double the usual amount (normal increments are 25 basis points). US analysts point to the dismal retail sales in December as the catalyst for the cut. The cut was expected to be instituted at the Fed meeting at the end of January. Anyway, what this says is that Greenspan may have overshot his initial target of giving the US economy a soft landing or at the very least preventing the economy from overheating. The signs of a slowdown were indeed apparent as early as the third quarter of last year, when a lot of major blue chips and tech stocks reported disappointing financial results.
The rate cut therefore was a shot in the arm that investors welcomed. Thus last night, the Dow shot up 299.60 points and the Nasdaq soared by 324.83 points.
Meanwhile, across the region, tech stocks were gored last year when the Nasdaq descended from its 5,000+ peak to just 3,000+ by the end of the year. Furthermore, talks of a global recession even came out following the impending slowdown of the US economy. This was a concern for almost all Asian economies which were all generally spurred by impressive exports. The US is generally the biggest importer after all. Thus in a simplistic statement, a slowdown by the US will bring about a slowdown in the recovering but fragile Asian economies.
Thus, the rate cut -- which is in fact expected as a start of series of cuts by the US Fed -- will hopefully spur the US economy back to growth. (However, the effects are by no means immediate so we can still expect a weak first half in the US.) In consequence, Asian bourses were also given a lift. And this would include our local stock market which gained 24.15 points today. But like the 46.01 point drop the index registered right after the Manila bombings, today's gain too was a knee-jerk reaction. Nonetheless, we don't really expect an immediate correction tomorrow. Perhaps we can take our cue from the US again since investors will probably look at the US market's follow-through performance to gauge our own.
The US rate cut likewise emboldened the BSP which is now contemplating on a 50-100 basis point cut. It is a relief too, since the BSP spiked interest rates months ago to stem the peso's non-stop fall. This was a fortunate development for the BSP which had been eyeing a looser monetary policy to give the struggling local companies a break. Notwithstanding the potential turnaround of the US and the BSPs release of liquidity into the system, we don't really expect even a moderate rally in the stock market. After all, the country is still fixated in the ongoing impeachment trial of Pres. Estrada and there are still major economic issues to be addressed, most notably the country's budget deficit and the public debt.
January 3, 2001
Light and Easy
The market inched up 2.47 points today in a very light and easy trading session. Only P215.93mn worth of stocks were traded. Gainers and losers were almost equal in number with 23 and 22 issues, respectively. This just shows that investors really haven't shown any serious interest in the market. This has been the trend for the past months. While then, the lackluster mood just represented the general weakness in the economy; the recent months can be more or less attributed to the ongoing impeachment trial of president Estrada. Indeed the market at several occasions moved depending on the developments of the trial. After the initial direct examination of Clarissa Ocampo, the composite index jumped by 38.65 points. But over the last weekend, the Metro Manila bombings provided new stimuli for the market. In fact in the session proceeding that weekend, the index dropped 46.01 points. And that's where the market was preceding today's session.
There are thus two major issues contributing to today's performance. For one, the bombing gave the market a knee-jerk sell reaction. This was true for the peso, which touched an all-time low of P52:$1 early on in yesterday's session. For that reason, the market merited a soft bounce today, or at the very least a slighter drop. The other factor is the impeachment trial, which continues to entrance the public, investors included. While the evidences being produced by the prosecution team have indeed been very compelling, we are not given any indication as to how the senator-judges will vote. It is for this reason that most investors are still suspending judgment on the market.
Meanwhile, as perhaps another indication of deteriorating economic fundamentals, the BSP said that they may not be able to cut its overnight rates to nine percent this year. The BSP earlier said that it plans to bring down interest rates after it temporarily hiked rates successively to temper the peso's fall. The fall came amidst the initial accusations of Ilocos Sur Governor Chavit Singson that President Estrada is in fact the benefactor of billions of pesos worth of jueteng proceeds. Unfortunately, that period coincided with the weakening of the regional currencies brought about by the strengthening of the US dollar. At about that period, the US started showing signs of slowing down which was the objective of the Fed Board. There have been fears that the US economy was overheating
As for individual stocks, MPC was the best performing index stock with a 7.55% gain. This is a mere technical bounce. After all, it dropped by almost 12% yesterday. With the gain, it closed at P0.57. ALI likewise bounced back to its pre-bombing level, gaining back the P0.20 it lost yesterday. It closed at P5.2. ION which has been one of the market's best performers, had a mild correction today, dropping P0.50 to settle at P14.50. Today's worst index performer was MER which was sold down by 8.16%, pushing it to P45. With the decline, the issue covered a gap up it registered two weeks ago.
January 2, 2001
Last Saturday's bombings delivered a very clear message to investors: that the country has a very risky political environment. A manifestation of that impression was the 46.01 point drop of the main index. That nearly erased the 68.45 point gain by the market for the whole of last week. Furthermore, out of the 89 issues traded, only six managed to eke out gains. In comparison, 63 issues registered declines. And quite consistently, the peso breached the P52:$1 level early in the morning, from a below P50 average last Friday.
Among the blue chips, the only pair of gainers were the Canadian insurers, SLC and MFC. SLC jumped by another P50 to close at another all time high of P1330. To illustrate how rapid the issue has been rising, its current closing price carries a 15.8% premium over its 30-day average, and over 21.4% over its 60-day average. Quite clearly, SLC is overbought at this point. Nonetheless, in SLC's short history in the local bourse, it has shown a consistent level of strength. With the current political crisis aggravated by last weekend's bombings, SLC may continue to be the rare haven for investors. MFC performed just as well, with a P35 gain. The issue closed at P1565 - a new all time high. Like SLC, MFC has also risen very rapidly in past weeks and has likewise remained strong throughout its history as a Philippine-listed stock.
Apart from the hedged pair, most other index issues succumbed to selling pressure. Foremost were second liners Belle Corporation and Metro Pacific, which dropped 13.04% and 11.67%, respectively. Major blue chips such as ALI, SMPH and MERB which were the most heavily traded stocks for the day were all sold down. ALI slipped by 3.7% to P5.2. SMPH tripped by 5.17% to close down at P5.5. MERB fell 6.06% to close at P46.5.
In terms of expectations, we would more likely lean towards further corrections, considering that the run-up last week was by large just window dressing by GFIs and other funds. Furthermore, itís quite logical that the bomb scare last weekend will do just that to investors. It would also most likely provide more passion into the already heated political landscape given the knee-jerk finger pointing among Estrada-loyal troops, opposition leaders, leftists and political analysts.
Happy New Year!
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Now was that good for you too? Anyway, sorry I haven't updated in a while. My mind's in vacation mode already. Heck, I don't even know what has happened to the market lately. Anyway, I think this is an anniversary of sorts. I believe I created this site just about a year ago. So little time. So much losses. hehehehe.
That was some major knee-jerk reaction. Just a day went by after a 33-point rally, and we're already almost back to square one. In a seeming rush to take quick profits, investors took different selling routes, but all those contributed to a 21.6 point decline in the main index. Only a couple of stocks managed to eke out gains and these were mostly third liners. In fact, among the index issues, only LND ended in the green. While this could easily be dismissed as a technical reaction, on a more fundamental angle, we do believe that the market will be headed downwards in the coming weeks and months. Consider a brief example. In the past days, there were various articles coming out that were all connected with the country's budget deficit. Perhaps we can even call it a confluence of budget deficit symptoms. Now, the impeachment trial has focused on the bogus bank accounts allegedly opened by President Estrada at EBC PCI. So now the attention has shifted to the country's image as a money launderer's heaven. Rather, it's not so much a discovery as it is a validation. After all, we have been branded by an independent agency as a laundering haven long before the onset of this political crisis. To an extent, such issues also tend to question the soundness of the banking system. The fact that the prosecution panel of the impeachment court claimed that the evidence from EBC was "doctored" will not help the image of the banking system at all. Clearly, such prevalent issues will not mark the start of any upcoming major rally in the stock market. By the process of elimination, we would have a downward trek ahead of us.
Meanwhile, BPI announced that its executive committee has declared a cash dividend of 80 centavos a share. The bank said the record date of the cash dividend will depend on the central bank's approval of the dividend. The bank last paid a dividend of 1.60 pesos on October 20 this year. Socio-Economic Planning Secretary Felipe Medalla said the government has lowered its gross domestic product (GDP) growth target to 3.0-3.5 percent for 2001. Medalla also said gross national product (GNP) growth next year was seen at 3.2-3.7 percent. The original 2001 GDP growth target was at 4.0-4.5 percent, but the government had revised that to 3.5 percent earlier this month. The 2001 forecast for inflation was also revised to 6.5-7.5 percent, from 6.0 percent. The new 2001 budget deficit target was set at 120 billion pesos, higher than the previously forecast 82-85 billion pesos. - Reuters
The large institutional buying for SMCB drove the market turnover to over P2.69bn today. Thatís a large jump considering that the market has been languishing with under P500mn turnovers for the past weeks. SMCBís P1 gain helped lift the composite index by 5.8 points. The market has thus risen for the fourth consecutive day, and is up 9.16 points for the month.
The speculations surrounding the major cross of SMCB shares of course are underpinned by news that SMC is once again making a bid to buy back CCBPI from Coca-cola Amatil. While that is certainly a possibility, we will reserve our judgments when the issues are clearer.
Meanwhile we would like to express our concern the countryís seemingly unstoppable budget deficit. Once again, it is at the forefront of issues owing to the unusually large shortfall in revenues of the BIR for the year. Once again we have the government scampering for funds to finance the deficit. We fear that this might lead to the fast-tracking of several revenue raising activities, which may result in more transactional irregularities. Should there be procedures bypassed, those might be negatively perceived by an already skeptical public.
Furthermore, the involvement of Marcos and Erap cronies in recent major events, such as President Estradaís declaration that the cocolevy funds are private, the BSPís hasty decision to lend support to Lucio Tansí PNB, and even the privatization of IBC-13, may be perceived as having political motivations. This is especially true if viewed in light of the ongoing impeachment trial of the president.
With a suspicious investing public, we donít expect much upside from the stock market. On the contrary, there seem to be more reasons to sell out, among those would be the possible extension of the impeachment trial or even an acquittal which Agriculture Secretary Edgardo Angara boldly predicted.
Lastly, the peso may have been given a respite since December is OFW season. However, once remittances die down to normal levels, we might see more selling pressure on the peso.
Trading was more of the same. Low volume. No major movements. You could say its a complete picture of disinterest on the part of investors. Nonetheless, market debutante managed to pull of a surprise, rising by 18.9% to P1.76 from its IPO price of P1.48. The company announced that it expected its net income to jump to P35.2mn from this year's estimate of P4.7mn.
Meanwhile, LTDI disclosed that its net income for the first eleven months of the year rose to P1.27bn, up 40% from a year earlier. Revenues for the same period reached P12.9bn, or a 36% improvement. The company likewise declared a cash dividend of P0.375 / share payable on January 15, 2001 for shareholders of record as of December 28, 2000. For the day, the issue rose P0.50 to P30. The issue has thus risen for over 7% in the past two weeks. We expect the issue price to appreciate further in the coming days.
AC announced a P0.03 / share cash dividend for shareholders on record on January 10, to be paid on February 12, 2001. AC closed unchanged at P7.2.
The BSP earlier cut interest rates by 50 basis points, thereby lowering the bank's overnight borrowing rate to 13.5% and the overnight lending rate 15.75%. The BSP issued a statement beforehand that it wanted to cut its key rates by about three percentage points.
EEI disclosed that it has approved integration of its wholly-owned subsidiary Philrock. EEI was untraded at P0.37
Well things have certainly been calm as of late. For over a week now, the index hasn't moved by more than 10 points. This was of course complemented by lackluster volume. And why is that? Everyone's really just focused on the on-going impeachment trial. Being still in the preliminary stages, the trial may go either way. As such, the consequences though potentially extreme either way, remain on hold as of this time.
But of course, trading opportunities still exist. Yesterday, we pointed out that BPI shareholders may start unloading in the short term. In fact, although BPI still managed to gain P0.50 today, it closed P0.50 short of its intra-day high. This perhaps, signals the weakening of the issue. We expect a slight correction, before the issue resumes with a potential extended rally.
Meanwhile, ION continued its healthy descent, as was expected. The issue declined 3.39% today, closing at P14.25, thereby bringing its losses to P1 or a little more than 6% in the past five days. We believe this issue may decline by more than 10% temporarily in the proceeding weeks.
EBC is looking good. The issue rallied for a second day, gaining P0.50 to P55. We believe the issue's rally has just begun. It may gain about 10% more in succeeding sessions. A word of caution though: EBC seems to be in hot water for denying the impeachment prosecutors access to crucial documents. There is a possibility of public backlash on the issue.
JGS, albeit nearer oversold levels looks a bit uncertain from a technical perspective. It rallied a bit too early for comfort. Today it gained P0.02 to close higher at P2.02.
ALI looks like its on the twilight of its rally. With another P0.50 gain today, it has aggregately gained 6.5% in over a week. There seems to be strong resistance at the P4.95 level, where the issue had a lengthy consolidation from mid to late November.