JANUARY 31, 2000

Only good for quickies

The market went on a technical rally today, gaining 20.04 points as investors took the opportunity to bargain hunt. From the peak of 2153.18 early in the month, the index steadily dropped by an aggregate of almost 200 points led by the country's biggest blue chips. Leading the bounce today were MERB (+5.83% to P109), ALI (+4.3% to P4.3), MBT (+2.97% to P260), and SMC (+0.96% to P52.50). Nonetheless, the 20 point gain does not seem convincing, after all there were more losers than gainers (56:51) and value turnover remains thin at just P1.7bn. Significant attention was given to SMPH today as it cornered over P250mn in investors' funds. Other heavily traded issues were TEL, BW, FLI, MBT, BPC, ALI, BPI and AC. TEL continued to drop and neared its month low of P940 even as it seemed poised to cover the issue's P180 gap up last December 11. BW, which has lost general investor support following the streak of negative news hounding the company, its officers and its shareholders dropped to its 8-month low at P7.6.

The market ignored the Dow's +200 point drop last Friday, but we don't believe that this signals a recovery in share prices just yet. The investors have already discounted the probable 25 basis points increase of rates in the US, but concerns will continue because a series of hikes may be in the offing. According to one US report, the rate hikes imposed in 1999 did little to slow down the US' hot economy. As for the local front, political news relating to the stock market will continue to weigh down on investor confidence. As long as insider trading, price manipulation and investigations continue to hog the headlines, investors will have a reason to sell. Given the light volumes, price volatility has increased. We would look upon that as an opportunity to trade oversold blue chips, but we would also advice taking profits when possible. And as there is still much downside to the market, buy only issues that have long term viability. Issues that have dropped steadily in the past sessions include ICT which closed at P2.7, BPC at P6.5, and JFC at P13.50.

JANUARY 28

Almost there

The market closed down 5.81 points today, as broad selling continued to define trading. There were 72 losers to 33 gainers, where most of the gainers were mining or oil issues. The property index posted a mild gain with ALI carrying the cudgels. ALI closed up P0.20 to P9.3. Active issues included TEL which was unchanged at P965, and BPI (-P2) which closed at P98 - its lowest since April 1999. Others were SMPH at P6.4, MERB (-P1) at P103, AC at P10.50, EBC (+P0.50) at P84, MBT (+P4.50) at P252.50, and SMCB (-P0.50) at P52.50. Volumes remain thin, valued at P1.58bn and generally concentrated on the biggest blue chips. The market did not react to the GDP figures at all. GDP was up 3.2% over the previous year. For next week the market direction will be generally dictated by the US Fed Board decision on interest rates, and the news that world oil prices have hit a 10-year high. The OPEC are biased towards more output cuts. There was a forecast made that oil prices might hit $30 by yearend. There are still no positive developments that will convincingly push the market up. The index looks ready to bounce mildly at 1969.39, but may test the 1900 support by next week. Quickie picks: (generally the closer the figures, the more attractive the issue)

FLI - Daily P3.35, Weekly P3.1; JFC -Daily P13.5, Weekly P13; BPC - Daily P6.8, Weekly P6; MUSX - Daily P5, Weekly P4.8; FEB - Daily P65.50, Weekly P63; BPI - Daily P98, Weekly P95; ION - Daily P12, Weekly; P11.25 ICT - Daily P2.9, Weekly; P2.8 MEG - Daily P1.24, Weekly P1.18; MERB - Daily P102, Weekly P97

By the way, I posted a couple of articles that I found very interesting. You can view them from here.

JANUARY 27

In and Out once more

The index dropped 23.39 points today. The mood was pensive, as decliners swamped advancers 65:28. Last December 11, the index gapped up by 72 points led by TEL's sterling performance. The market corrected for a couple of days before window dressing took over the market. This continued to the end of 1999, but with very thin volume. For the index to cover this gap, it should fall to around 1900. The index is at 1975.20 right now. At 1900, both the daily and weekly charts will be at oversold levels. I reasoned then that the market should fall to these levels because the year-end rally was without support. Well, I guess the call just came a bit early. I figured then that I was wrong, and invested in MBT thinking that if the index runs up, I would want to be positioned. Eeks. Now, there are a lot of stocks that are reaching oversold levels once again so we can afford to be choosy. I'll name a couple of them for you: ICT at P2.9, SMPH looks really good at P6.3 on the daily, but may possibly reach P6.1 on the weekly, LTDI looks good as is at P28, FEB looks good at P67 but may possibly try P65, the same goes for DGTL at P1.16 but may floor at P1.12, RFM at P3.2, but may floor at P3.1, MBT at about P247, and how could I miss SMDC yesterday at P0.8. Note that these are trading buys. Unless the political outlook suddenly turns cheery, be quick to take profits.

JANUARY 25

Market Review

Trading was pared to a bare minimum, reflecting the perception of uncertainty among investors. The ones who did trade apparently did so to pull out of the market. As such, the most traded issues generally registered drops even as the index played around in a narrow 17-point range. Factors that might have prompted investors to stay at the sidelines include: the Stanley Ho triad issue which hogged most headlines today, the Fed Board meeting - the results of which is seen to be a gauge of the condition of the US economy, and perhaps even the expected oil price hike following the rise in world oil prices last week. A summary of trading showed that selldowns were commonplace with decliners easily outnumber gainers 73:31. The most actively traded issue today was BW Resources, the price of which reflected the mixed sentiments on the issue. The price of BW shares today fluctuated at a wide 40% range, hitting a high of P11.50 before being sold down to P8.20. Stanley Ho who bought in to BW last year expressed disbelief with news linking him to organized crime. He announced that he was having second thoughts on investing in the country, which in turn was viewed as a threat by some sectors. Big capitalized stocks, which are generally considered safe havens for investment were likewise subject to mixed opinions. TEL, BPI, MBT and BPC cornered most of the trading action perhaps depicting a flight to big caps, but in view of the continued drop of BPI and MBT, this might be an illustration of investor liquidation. The latter scenario would be validated by the substantial net foreign selling of P201mn today, mostly concentrated on the big caps mentioned. MBT closed at P250 (-P2.50), BPI at P105 (-P1.0), and BPC at P8 (-P0.2). TEL exhibited a contrarian stance, gaining P15 but mostly to match the price of its ADRs which had P9 premium as of last night. TEL closed up P15 at P990. Music Corporation (MUSX) announced that its affiliate Music.com has secured an equity investment from Citicorp Capital Asia Limited amounting to $6mn, equivalent to a 21.87% stake. MUSX shed P0.30 to close at P5.3. SPI technologies (SPI) announced that its 20% stock dividend's ex-date will be on Feb 1, with the record date on Feb 7. SPI was up P0.25 to P13.75

Market Outlook

The market will likely remain soft pending any substantial positive news. We would expect sideways movement brought about by a lack of investor interest, with a tinge of volatility as an offshoot of thin volume trading. See it as an opportunity to trade.

JANUARY 21

Market Review

The index gained 9.29 points to close higher after falling as much as 10 points with minimal trading as investors remain disinterested following the political drama unfolding. In consequence, value turnover was disturbingly low at P1.4bn, with index issues just accounting for over P640mn. While most investors chose to stay at the sidelines, other punters gambled with crony stock BW Resources In another session of erratic trading, BW dropped as much as 16% at P6.2 before end-trade buying propped up the shares to P9.6, or a 29.73% gain. BW was today's most actively traded stock with over P350mn value turnover. As the BW-Yasay-Estrada fiasco continued to dominate headlines, foreign funds eased out of the market to a tune of P170mn in this morning's session. The sell-off affected most blue chips specially MBT and TEL. MBT shed another P2.50 to close at P250, while TEL dropped P10 to close at P980. BPI lost P2 to end at P107. Standard and Poors said that the credit quality of shipping companies across Southeast Asia has suffered in the past two years. Such firms are typically structured with volatile cash flows and high debt. The deterioration was caused by intense price-based competition led by lower cargo traffic and excess capacity. Other reaons include large forex losses due to the depreciation of regional currencies against the US dollar. Negros Navigation, the shipping arm of the MPC conglomerate was rated as "Weak". NN fell 6.67% to P0.28, while MPC gained 1.59% to P1.28.

Market Outlook

We would claim that the market movements are not reflective of its true levels given the sparse volume this past week. Thus the index this week was influenced by 2 or 3 heavyweights, and may not be at sync with the movements of other issues. Furthermore, almost half the investor participation were directed at speculative issues. Without any substantial news, the index might just mimic the regional or US sentiments, as a number of investors tend to correlate regional movements to our market. Thus, we would suggest selective positioning in issues that have been sold down without volume, as true levels should be reflected once volume seeps back into the market.

JANUARY 20

Market Review

The market inched up 4.84 points as late buying buoyed share prices of a number of index stocks. When trading closed, 47 issues were greens, while 59 were in the red reflecting the rather hesitant mood of the market. The lackluster trading interest has been evident the whole week. Today, index turnover just reached P789mn. The latest news that added to the market's gloom was SEC head Perfecto Yasay's allegations that President Estrada called him up four times, and told him to exonerate Dante Tan from the BW insider trading mess. In the past weeks, Estrada has been busy tidying up his cabinet and his “midnight-cabinet”, apart from shelving his Cha-cha initiative in order to prop up his popularity, which took a nose-dive late last year. Reflecting a lack of public trust, BW Resources slid 21.28% to close at P7.4, its lowest since May 1999. AHI of coursed followed suit as it shed 11.11% to close at P4, albeit with much thinner volume. Here are the closing prices of today's most active issues: TEL (-P10) at P990, MBT (unch) at P252.50, BPC (unch) at P8.6, MERB (-P4) at P109, OM (unch) at P0.022, EBC (+P0.50) at P87.50, AC (+P0.25) at P11, BPI (-P2) at P109, and SMPH (-P0.1) at P6.8.

Market Outlook

Right now, there does not seem to be anything that will boost share prices. On the contrary, there is a growing list of deadweights. Consider the political climate, with the SEC chief admitting pressure from the President to turn his back from an ongoing trading irregularity investigation of a known “crony” stock. In the economic front, the ADB has scaled down its GDP target for the country to 3% owing to ADB’s reservations that the country can carry out the necessary reforms. Furthermore, fiscal stimulus will be pared to its barest as the deficit target takes precedence over expenditures. Overseas, with a generally bearish sentiment in the US bond market, interest rate hikes are foreseen. A number of analysts have also claimed that the US economy is overheating, and that the US stock market is vulnerable to a bust. A number of analysts claim the same scenario for Hong Kong. Perhaps the best signal for an upcoming uptrend in the market would be better first quarter results from the listed companies. The economic indicators that we then perceived to have bottomed out (loan growth, NPL, imports) were below expectations in their most recent releases, thus negating our positive outlook.

JANUARY 18

Temporary review

Oh my apologies to everyone. I had this meeting and I left my market review in the office. Shucks and it was beautifully written too. Correct is another matter of course. In any case, the market looks a bit bearish to me. With the corporate results coming out in the US, good earnings will probably siphon out the investors here in their favor. Perhaps we're already seeing that, with just over P600mn worth of index stocks traded today. Then again, there's also BW and the way it invigorates or breaks down the souls of its investors. Everytime the market takes a pause, BW starts streaking up and down and takes all the volume with it. Needless to say, that results in a selldown of blue chips.

And then there's Metrobank and the way it's been breaking my heart these days. It's oversold when it dropped to an intra-day low of P255, but then it closed at P257.50. Well I guess a credit downgrade does that to a stock price. In any case, though with less confidence now I still believe that it will be one of the leaders in the next run-up. Other potential issues are JGS, BPI and ICT.

In the meanwhile, if the market continues to drop without volume I think that's a good sign that prices are artificially low.

JANUARY 13

Market Review

It was a bad day for the market as speculative issues once against dominated trading. BW, which has been the object of various controversial news ever since it's spectacular rise last year saw its trading swell to P1.37bn. BW was played up to as high at P20.25 from P16.75 the previous day before heavy profit taking drove it down to as low as P13.75. It settled down to P14 at close. The next most actively traded issue was SSO after the company reported that erstwhile BEL chair Robert Ongpin made a P600mn buy-in offer. SSO was to dispose of its mining assets in preparation for its transformation into an internet venture. SSO soared on the news, closing 18.18% up to P0.13 with value turnover of over P220mn. With minimal foreign money participating in today's trade, index issues were sold down by local investors who bet their money on BW and SSO. As such, the index closed down by 16.52 points with only 8 out of the 33 index issues registering gains, while totalling just a shade of P620mn in turnover. Total decliners outnumbered gainers 62:47.

The third most active issue was MBT, after newspapers reported that two international credit rating agencies downgraded MBT following its acquisition binge, which culminated with its purchase of Solidbank. Credit analysts claim that the acquisition weakened MBT's credit profile. As such, MBT dropped to P260 after which bargain hunters drove up the stock to P272.50. The issue closed P2.5 higher at P265.

Metro Pacific (MPC) earlier announced that it had received approval from the Securities and Exchange Commission (SEC) to issue P2bn worth of short term commercial papers. The proceeds of the issue would be used for the company's working capital and ongoing debt reduction programme. MPC closed slightly weaker at P1.32.

Market Outlook

Given the fairly positive political climate, we would expect a gradual uptick of the index. Presently though, a consolidation seems to be in order as some index issues are due for a correction, while others have greatly lagged behind. The market is likewise dependent on the performance of BW for as long as foreign participation is minimal, such that any intensified trading for the stock would result in a sell-off of other stocks. Near the end of the month, the market may correct as investors might use the US Fed meeting as an excuse to sell down.

Quick Picks

Offhand, I have a couple of picks that you might want to check out: BPI at P108, JGS at P3.6, ATI at P1, JFC at P13.5 and the shares that I have, MBT at P260

JANUARY 10

Market Review

The region's indices all closed up today, with the Phisix gaining handily with 47.96 points. The rally was led by heavyweight TEL which emerged as the day's most actively traded blue chip, in the process gaining P15 to close at P1020. Sentiment was positive as President Estrada announced that he will be shelving plans for his Constitutional Correction (Concord). Estrada's popularity rating dropped to 26% according to a survey released last week. This quickly reflected the renewed confidence in the market, as most index issues recorded an uptick. Nonetheless, decliners outnumbered gainers 62:52. The statistics help validate our observation that portfolio shifting has already started, in favor of the blue chips and second liners. Among the beneficiaries of this transferring of funds include ALI (+6.06%), MPC (+5.71%), BPC (+7.04%), SMCB (+2.7%) and AC (+2.27%). MBT raced to P270 early in the session after it was reported that the Monetary Board has approved MBT's acquisition of Solidbank shares. At the same time, Nova Scotia pulled out its request for the SEC to suspend the acquisition, saying that it would be of no use now. Foreign profit taking pared MBT's gains to just P2.50, as the issue closed at P265. BPC gained P0.50 to close at P7.60 following the company's disclosure that its subsidiaries Sky Cable and Bayantel will join forces to invest in cable telephony, allowing users access to the Internet via cable. BPC likens its thrust to TEL's strategy. BPC likewise announced that it will allocate capex of over P5bn for the year, with a bulk going to ABS-CBN. ABS has a net income growth target of 15% for 2000. ABS closed unchanged at P52. All indices were up except for oil, with the property index gaining 4.15%, propped up mostly by ALI and SMPH (+2.78%) as investors flocked to large cap companies with proven track records. The big casualty in today's session was BW Resources which hit its floor price of P12.75, alongside with its subsidiary Armstrong Holdings which floored at P4.7.

Market Outlook

The improving political climate will be the main source of the market's buoyance in term. The passage of crucial bills within the coming weeks will strengthen the expected 1Q2000 rally. Nonetheless, investors remain selective in buying, careful not to chase after soaring prices. Issues that have yet to run up include MBT, BPI, ICT and JFC. In the stockholders' meeting of Centennial City Inc. (CITY), the company reported a net loss of P18.046 mn for fiscal year 1999 (June 30) as a result of the weak property sector and interest expenses on its loan obligations. During the meeting, the stockholders approved an increase in its authorized capital stock from P8 bn to P18 bn with the new capitalization broken down as follows: P14.3 bn common shares, P700 mn preferred shares and P3 bn convertible preferred shares, all of which will have a par value of P1 per share. The stockholders also approved a management contract with a strategic investor, the group of Ramon Ang, which will help the company in its real estate projects. The contract will last for 5 years and renewable for another 5 years with the company paying a management fee of not less than 5% of net income to the strategic investor. The company also changed its corporate name from Centennial City, Inc. to Cyber Bay Corporation. CITY officials also stated that a multinational company focusing on cyberbusiness is interested in investing in the coastal bay property of the company. No details however were provided.

JANUARY 7

Market Review Shares closed mixed with market breadth favoring decliners over gainers 63:44. The main index however, closed up a second day led by TEL (+P10), MERB (+P4) and BPC (+P0.20). These issues were in the favor of foreign funds, aggregating a net buying position of over P90mn. Other index issues likewise registered gains, such as SMCB (+P0.50), JFC (+P0.25) and SMPH (+P0.20) as well as second liners, including MEG (+P0.02), MPC (+0.02), ICT (+P0.05), FLI (+P0.05) and FDC (+P0.05). Thus the bulk of the losers were third liners and speculative issues, perhaps indicating the beginning of a shift in portfolios by investors. The hardest hit issues were also among the most actively traded, indicating a sell-down attitude among these issues. This would include BW (-19.23%), SSO (-13.04%), and FER (-5.43%). AHI, which generally moves with parent BW, likewise lost 21.21% of its value. Investor participation was slight with total value turnover just reaching P1.7bn, with index stocks just accounting for P777mn. This was partly due to light participation of foreign investors, but generally due to caution being exercised by the investing public. The current issue dampening investor interest is the looming cabinet revamp. The market weakened upon the announcement of the resignation of Finance Secretary Edgardo Espiritu, who was seen as one of the more credible members of the cabinet. Regional stocks weakened this morning as speculations of a US rate hike instilled fear in investors that the thinning premium against US yields would drive funds to the US. As such, most regional currencies were also weaker against the greenback. The peso in fact opened at P40.75 to the dollar, it's weakest level in weeks.

Market Outlook

The market's recovery for the past two days have not been convincing, given the slight volumes and the mild selling position of foreign investors. If there is indeed no follow-up to last Wednesday's correction, we would favor a consolidation in the coming week to strengthen the support in this index level, before any further run-up. Factors that would influence the market in the short term are the perennial fears of a US rate hike preceding a US Fed meeting at the beginning of February, the perception of political instability following another shake-up in the president's cabinet and the expected oil price hike led by the industry's big three. A positive sign for our market though is the US and Asia-wide sell-down of tech stocks (which we lack), in favor of more traditional blue chips which would probably see more pleasant profits this year. Seeming candidates here include ABS and MERB, which have been performing stronger than the market in recent sessions. Issues that have fallen to more attractive levels include BPI which dropped a peso to P110. BPI came from a recent high of P118. MBT is likewise nearing its support level, as it shed P2.50 to close at P262.50 today. JGS is coming off its 4th decline in 5 sessions, but can still fall to more enticing buying levels.

JANUARY 5

Market Review

The market finally corrected after blitzing up in 10 out of the 11 last trading sessions, as TEL set the tone, dropping P80 to close at P1010. This was prompted by the $1 correction of the PLDT ADRs last night as the Dow dropped 359.58 points on expectations of higher interest rates. The Dow's large drop weakened most of the regions' currencies and stock markets. With TEL opening P40 lower this morning, a profit taking wave swept the market, with decliners swamping gainers more than 5:1. All index stocks were down or unchanged and all sub-indices save for the mining sub-index closed lower. This technical correction was expected and welcome, given the sparse volume that supported the recent run-up. Other actively traded blue chips were MBT (-P10), SMCB (-P2), MERB (-P2), ALI (-P.45), BPC (-P0.3), SMC (-P2), SMPH (-P0.3) and AC (-P0.25). But as is usually the case during market corrections, interest for speculative issues heightened as BW, SSO, FER and OM combined for total turnover reaching P500mn. With the decline, the index breached the 2100 support and could soon test the 2000 psychological support level. The index closed at 2074.75. FER announced that its subsidiary AB Leisure was going to allot P100mn for expansion projects this year, following its recent acquisition of 12 bingo outlets. FER weakened by P0.5 in early trade, before a subsantial volume propped the price up by 8.33% before closing. UW was another rare gainer in today's session, as its subsidiary Uniwide Sales Realty and Resources Corp. was reported to have come to an debt-for-asset swap settlement with creditor UCBP for loans amounting P1.044bn. UW crept up 2.33% to P0.44. MBT fell heavily for a second session as Nova Scotia continued to raise issues regarding MBT's offer to buy out Solidbank from the Madrigal family. MBT peaked at P290 after the Madrigal family formally conveyed to MBT that Nova Scotia's right to first refusal over the Madrigal's shares had expired, but had since lost P22.50 to close at P267.50 today.

Market Outlook

The market can test the 2000 support by the end of the week. Apart from a technical correction, new factors can weigh on the market in the short term. This would include renewed fears of higher interest rates in the US and news of another series of oil price hikes in the first quarter. Nonetheless, we remain optimistic about the market for the year, and see a drop in the index as a buying window for our selected stocks. Issues nearing support levels are MBT and ICT.

JANUARY 3

Market Review

The index slipped 1.20 points as major blue chips succumbed to profit taking. The drop was primarily on the back of declines for AC (-7.14%) and SMPH (-2.63%), ICT (-2.74%) and MER (-2.09%), in effect offsetting the day's market dominated by gainers. Advancers swamped decliners 77:28 with other major blue chips such as TEL (+P10), SMCB (+0.50), MERB (+P3), BPC (+P0.40) and SMC (+P58) continuing their respective rallies. We are concerned however that the present price levels are still not supported by apt volumes, with turnover reaching just P1.3bn. Index turnover totaled a measly P461mn, as speculative issues BW and OM combined for over P580mn.

Among the newsmakers today were MBT, after the Madrigal family of Solidbank formally notified MBT that Nova Scotia's option to exercise its right to acquire the Madrigal's 38% share in Solidbank has expired. MBT's pending acquisition of Solidbank would catapult MBT's size back to number 1 among the country's unibanks. From it's low price of P260 in mid-December, MBT today peaked at P295, or a 13.5% jump, before it closed unchanged from last week's session at P290. WPI earlier announced that it would finalize arrangements for a strategic partnership with a foreign group by the second quarter of the year. The partnership will focus on WPI's hotel and casino business. Investors reacted positively, as WPI jumped 7.14% to close at P1.5 today.

The arrival of Stanley Ho's P600mn floating restaurant gave punters another reason to pick-up BW shares after its distressing sell-off on December 29. BW recouped much of its losses, gaining 15.46% to close at P28. The restaurant is now located at the Manila Bay while awaiting clearance from customs.

Market Outlook .

By this time, investors who bought shares in Mid-December would have for themselves a decent profit. We continue to recommend that investors realize their gains first, while awaiting for lower entry levels or at support levels of different trading ranges. While we believe we will see relatively higher prices for the stock market within the quarter, a correction may be healthy for a more sustainable uptrend. The surge in the final days of 1999 was attributed to fund managers' window dressing efforts. The Phisix has immediate support at 2100 and immediate resistance at 2240.

Classic rotation (c/o Bruce)

Today's trading signified that the year-end window dressing has ended and buying interest has shifted to the second-liners. With no follow-through buying with the blues, the index is destined for a correction back to the 2030-2060 level (it's hard to approximate a level now that we're in a new territory). This new uncertain territory demands that the correction must hold at support, so that an uptrend line will be created from this coming higher low. What is certain is that after this rotation to the second-liners we are experiencing right now, third-liners and penny shares will be next in line. Let's take things slowly and a day at a time before jumping in with both feet. After all, nothing has changed so far with the foreigners' perception of our market/country.

This comment can likewise be read through mail by joining PhilippineStockMarket@egroups.com.. Check it out by entering your e-mail above.

DECEMBER 31, 1999

A chance to wash away old hurts and losses

So it's finally the last day of the millennium. Tomorrow promises to be the the freshest chance to start anew yet. New day. New month. New Year. New Decade. New Millenium. That's the only time we will experience that in our lifetime, so why not make it a real turning point. It's time to write off old hurts (and bad debts) and losses (not just in BW last Oct 12), to forgive others (for wrong postings!) and to open our arms and hearts to other people. I wish you all a prosperous new year, or better yet new life. Let us never forget to thank God for all the blessings He showers us with. No, I don't know what God's stock pick is; I do know that He loves us regardless of our trading track record and that all things are possible through Him.

See you all in Ayala later! (if I manage to successfully dodge all the stray bullets and defective firecrackers!)

FYI, I added two new cutie features: a poll that appears every once in a while regarding your stock pick for next year, and a subscription box if you'd like to receive stock market related mail discussions. (It's right above). Do try out these feautures. Again I'd like to enjoin you to e-mail me your market outlook, or stock picks, or write it down in my guestbook. Thanks!

DECEMBER 28

Waiting for the stars to fall

What is this market? I think it's unhealthy the way it keeps trekking up without volume support. The index has already breached 2100 and is nearing the 2150 level. My call is that it will be very good or very bad. The crucial point would be next week. After the season vacation, volume will steadily return to the market. If the volume fuels the rally, then too bad for me because I missed the start. If the high prices trigger a sell-off, then I see the index plunging back to pre-window dressing levels, in which case I would give myself a pat on the back for staying out of the market these past two weeks.

Personally, I think it's very hard to call the market because of a lot of wildcard factors, most notably Y2k concerns, the passage of crucial bills, and Erap of course. The Retail Trade Liberalization law in theory would be good for consumers, because they will be afforded more choices - and perhaps with enough competition - at lower prices. It will be good for ailing retailers like Uniwide which can now entertain foreign partners. IMart's purchase of First Paragon's (UW affiliate) assets provides a liquidity boost for UW, but is not substantial. Then there's the lingering interest of Walmart in UW that might provide the latter (and its investors like me! Dammit at P0.60!!! What was I thinking?!) a spark of hope. The law may benefit SMPH inasmuch as its malls are well entrenched in the country already. Therefore, foreign retailers may opt to have joint ventures with SMPH instead of building directly competing outlets, which would be more time and capital intensive. Frankly, I'd rather see more intense competition. I wouldn't call SM employer of the year, with less than 20% regular employees. Magulang if you will.

Anyway, there's this new article I posted. Look at the "articles" link above. It was e-mailed by (eto plugging!) my friend Chuck de Castro, who is a successful chupitero through and through. Makes you wonder if he follows these tips...

Happy New Year! Huwag masyadong mag-paputok! Masama yun...hehehehe...baka mabulag....hehehehe

DECEMBER 25

Christmas time

Unfortunately, I don't have an inkling what happened to the market yesterday. I guess I was too busy delivering gifts and eating dirty sisig to pay attention. Anyway, I'll take this opportunity to invite all armchair analysts to express their views through my site, so we can have a true sharing of thoughts and opinions. And for those who know a bit of web programming, perhaps you can advise me on how to make those pop-up banner disclaimers. It may be about time for me to put that in my site.

DECEMBER 22

Time to improvise

Perhaps its time to switch strategies. Noticing that I haven’t made a purchase in over a week, I think the period for oversold stocks may be momentarily over. This makes stock selection a bit more tricky now as we may now have to look at the stock’s inherent value, as against calling it purely on technical peaks and troughs.

The Asian Crisis left many investors smarting from losses, specially from the property sector which was severely affected by property demand drop and borrowing rate spike. Thus companies like MPC, MEG, ELI, FLI, FDC C&P and LND all neared or went below the P1 level in 1997 and 1998. In a sweeping statement, I’d theorize that all these companies are undervalued in terms of book value, but personally I have a liking for MEG, FLI, FDC and LND. When MEG soared to P1.90 a few months back, I left a few shares in my hands because I wouldn’t want to be left out when it peaks past P2.0 which I believe it can easily achieve in a span of 2-3 weeks. I don’t know when that will happen, but I am optimistic about next year. Although I was looking to pick it up at P1.18, I think P1.20+ is fair enough. It’s just the investor in me trying to catch bottom I suppose. MEG was one of the few listed companies that registered income growth in 1999, which I think is a statement for MEG itself. The few others I remember are SMPH, ICT, ATI and LTDI. These are companies I continue to look at, and will purchase given an attractive dip.

In the meantime, I’m still waiting to be hit down by SMDC sellers. It’s oversold at this point, but I just want a little more discount before I pick it up. This company has a very good balance sheet. It has virtually no debt, very liquid assets and positive income for 1999. I like it because it doesn’t that have much trade volume, which makes it a speculator-repellant!

Oh dear, what's up with RFM?! I sold it, but I don't believe it...

DECEMBER 21

Market Review

In a mix of preferences, today's market saw both blue chips and speculatives attracting investor interest, albeit still with moderate volumes. The net effect was a 33.51point increase in the Phisix, led by heavyweights' PLDT (+P20), SMC (+P1.5), SMCB (+P1), MBT (+P5), ALI (+P0.3) and BPC (+P0.3). These issues combined for over P870mn in value turnover. Foreign investor sentiment for these stocks were mixed, as they were net buyers for TEL and BPC, while choosing to profit take for SMCB, MBT and ALI. The index, which rose for a second session has now reached its 1-1/2 day high at 2031.39, and is now nearing the 2050 immediate resistance.

Market breadth was balanced, with advancers edging decliners 49:48. Traded shares reached 5.058bn, valuing over P3.8bn. A large cross of JGS shares worth P1.8bn was transacted earlier this morning.

Much of the market's rise in the past two weeks has been hinged on the window dressing attempts of fund managers, including government funds. Bargain hunting has likewise been evident the past weeks, as most erstwhile oversold index stocks have been bought up within the period.

Market Outlook

Despite the upward trek of the market, we remain of the opinion that fundamentals have not changed, and the run-up may not be sustainable. Nonetheless, if you had the opportunity to bargain hunt a week ago, it may be time to take profits and hold on to a little cash that will tide you over the market's Y2K concerns. If not, it may be too late for you to take advantage of this year-end run-up, and it would be better to wait for the prices to settle down again. There's a large possibility that prices fall soon, as volume-support for the rally remains unconvincing. We recommend a trading sell on JFC at P15, MERB at P113 and PLDT above P1000. Try watching out for JGS and ION as they near oversold levels.