June 28, 2000

Boring

It was just another non-event of a trading session. Trading was sparse and benign, seemingly oblivious to the non-compelling news for the day. It has been this way for a while. The desensitized investing public already knows of the US Fed's efforts to slow down the US economy, of the Mindanao situation stalemate, of our impending fuel-price doom, and of Lucio Tan's doubtful motives for PNB.

Quantitatively that translates to a value turnover level of just over P873mn, much in tune with the recent days' disinterested levels. For a change though, the index registered a 1.64 point gain. It wasn't much, but it did break the seven day losing streak of the market. Market breadth wasn't any more conclusive with a virtual draw of gainers and losers - with 42 issues for the former, and 45 for the latter.

Among issues that saw action were PLDT which gained P5 to P775, MBT which slid a peso to P203, AC which eased P0.20 to P7.7 and SMCB which closed unchanged at P52.50.

In a picture of perfect irony, LND earlier announced that its net income for 6 months to March 31, 2000 reached P95.29mn, or over 17% last year's P81.03mn on the back of a 7.8% improvement in revenues to P515.25mn, after the SEC threatened to delist the issue on the grounds of its delinquency in submitting its reportorial requirements with the body. From a trading perspective, LND basked in innocence and remained untouched the whole day.

Musings

We don't expect the market to shake off its sluggishness anytime soon. As we've mentioned before, inertia is keeping the market in a range too tight to almost become tradable. The news that we are being fed day after day no doubt seep into the issues' prices, but we believe these are just mitigating events. What the market needs is one strong stimulus that will place all these other stories in context of the big picture. When it does come, an upsurge may be in an offing as the negative impression imprinted in investors' minds by the still unresolved Mindanao situation has dampened prices enough. In all likelihood, it will probably be a major Internet upheaval for the market as studies have shown that most companies are already scrambling for presence. As such, we would expect a lot of major announcements by the end of the year. Patterned after the US, we would expect your basic communications and media convergence, white-hot B2B ventures, and the mushrooming of end-to-end web services.

June 26

Inertia

The trading climate has remained consistent for over a week now with today's 10.73 point drop which thus brings the main index' declines to 37.31. With no volatility to spur prices to attractive trading levels, trading activity has declined significantly even relative to the recent weeks' dry levels. Value turnover for the day just reached over P628mn on the back of selected blue chips. With no fresh IT-related announcements from third liners, speculative activity has likewise momentarily died down, in tune with the rest of the market.

SMC has won acceptance for 96.63% of J. Boag with its A$1.65/share offer. Under Australia's Corporations Law, San Miguel can compulsorily acquire the remaining shares, having reached the 90 percent acceptance threshold. As we've stated before, the importance of the acquisition of J. Boag to SMC is more strategic than directly financial given the poor balance sheet of J. Boag. SMC however is paying for time, since buying into an established company means instant access to large foreign market. The news drove investors to trade the stock, but it nonetheless closed unchanged P52.5.

MRC announced that it had entered into a share-swap agreement with Grocerific, an on-line computerised grocery delivery firm as part of the company's efforts to diversify. MRC has thus acquired 60% of the firm although the final terms of its entry would be drawn up after it completes its due diligence. MRC was up 3.28% To P0.63.

Pre-conditions for a rally

With the pace the market has been going, it will take quite a while before the 1,500 support level of the index will be reached. A few analysts would contend that a potential US rate hike may again influence the market. We believe otherwise, that domestic issues would in fact take precedence. The continuing tension in Mindanao will no doubt reflect on the employment and investment levels in the region in the coming months and perhaps even on the profitability of companies whose main markets are in the south. From the SEC figures regarding investments and business closures released earlier, it would show that we're coming from a bad base already. In order to have a more optimistic market, the government would have to convincingly and permanently bargain for peace, perform its functions transparently and hope the private sector has enough guts to reinvest money in worthwhile projects as well as for a stable external environment, notably US rates and world crude prices.

June 22

Market Review

The market continued to taper off in a very reserved fashion although stronger signs of a retracement may be just over the horizon. Today's trading session marked the fourth consecutive single-digit decline of the index, although the selling base in terms of market breadth seems to be widening. Out of the 141 issues traded, only 27 advanced while 60 declined. The rest were unchanged. The index has risen over 11% since last month and has just dropped 1.2% in the past week. Therefore there remains room for a drop.

Among the issues that bucked the broad decline was PLTL which earlier announced the signing of its debt restructuring plan with its creditors and mother company PLDT. The arrangement will restructure 37% of the company's debts, moving the debt repayment schedule back making the terms more lenient. A PLDT official said that the same terms will be offered to PLTL's bondholders and Marubeni which lay claim to the rest of PLTL's debts. On another issue, PLTL issued a press release that the company will focus its marketing efforts in its GSM offering, Talk'N'Text. The company's GSM service which makes use of Smart's GSM facilities has been receiving warm reception from the market. At the end of the day, PLTL's shares were up 3.92% to P1.060, but more importantly, volume traded was five times over the issue's 30-day average. This might be a signal that investors are now taking a second look at the issue. PLDT, which will dutifully infuse equity into PLTL to aid the latter's rehabilition was one of today's most actively traded issues, although it closed unchanged at P790.

Metrobank, which was reportedly planning to buy out the public's 10% stake in Solidbank closed down a peso to P205 after opening at a high P208. Solidbank in the meanwhile, was untraded.

Property developer FLI gained another 1.05% today to P1.92, bringing its two week gains to 7.8%. There seems to be a benign accumulation for the issue as volume traded has been steadily picking up while price volatility has been tapering off. A possible reason for the renewed interest in the issue was the central bank's initiative to develop real estate properties owned by banks alongside property developers to kickstart the government's housing program. On a broader view, it would seem that other property developers are returning to the market's favor as well. The property index, which underperformed very heavily near the end of May as the troubles in Mindanao took its toll on the exchange rate, is now almost at pace with the Phisix's rally.

Sun Life of Canada, one of the rare IPO babies for the year continues to be an inspiring issue, as it again turned in a record breaking performance. Gaining P25 to P695, the issue has once again closed at an all-time high. Not to be outdone of course is fellow-insurance powerhouse MFC which also closed at its all time high of P805, via a P20 gain for the day.

Other issues that are not as storied for the day, but just as traded include SMCB (-P0.50 to P52.50), SMPH (unch at P5.5), BPI (+P0.50 to P80.50), AC (unch at P7.8), RPC (+P0.01 to P0.9).

Market Outlook

We expect the index to drift to lower levels in the days, although probably without much volatility given the lack of compelling stimuli. Possible factors that may come into play include the Mindanao situation, given the government's June 30 deadline for the negotiations, OPEC's decision to increase the supply of crude to the world market, and its corresponding consequences in the domestic front and perhaps even the continued ripples being experienced by the financial system's investment houses.

June 20

Market Review

The index was hardly unchanged with a 0.27 slip while market breadth was partially negative as decliners outpaced advancers 48-31. With the index closing at 1560.40, the market has thus closed down for a second day as a few investors continued to take profits following the 41-point gain last Thursday. The NSO's earlier announcement that unemployment in the country reached its 9-year high failed to intensely dampen the market. The same is true for the government's economic managers' prediction of a higher than expected budget deficit for the year on the back of steep expenses to sustain the war in Mindanao. Nonetheless, we expect these issues to be factored into the market in the coming weeks.

Trades today were concentrated on blue chips. AC which is on its fourth rally week slipped P0.10 to P7.90. The company has been making up for lost time by investing a lot into its IT and Internet ventures. Noteworthy activities include the on-line Ayala Center, iAyala, Edsamail and of course the on-line exchange which it recently announced. The other most heavily traded issue was MERB which notched up a peso and a half to P66.50, coming off declines registered last week. Other issues which dominated the trading screens were BW (-P0.30 to P6.3), TEL (+P5 to P795), MBT (+P5 to P210), SMC (unch at P52), SLC (+P25 to all-time high of P665), SMPH (unch P5.4), AHI (-P0.06 to P1.48) and BPC (-P0.10 to P4.2).

Market Outlook

We maintain our stance that the market will move sideways, although recent news seems to indicate a slight downward bias. For one, the budget deficit issue will again be highlighted with the government paying a lot to sustain the multi-front battles in the south, given a backdrop of dwindling revenues from the BIR, poor privatization prospects of government owned companies as well as the implications of these. Without the privatization of PNB the World Bank will withhold a $300mn loan facility. The IMF on the other hand has continually reiterated the importance of meeting this year’s P62.5bn deficit target. Adding another dimension to the situation would be the very high unemployment rate. Pairing this potential lack of funds with the government’s need for fiscal priming to jolt the economy back to lower unemployment levels would depict the tight path that the government has to undertake to improve the economy.

June 14

Market Review

True to our expectations, investors continued to stay away from the market. Index issues accounted for just about P800mn in trades and the index just managed to eke out a 2.36 point gain to 1524.51. The same attitude apparently does not hold for punters, as thirdliners once again had their day in the sun. BW, which has acquired a cult following among speculators, led today's action with over 43mn shares traded -- it's highest volume turnover in a month. The issue closed up 3.23% to P6.4 - it's highest level since late March. It would seem as if BW is headed for one of those runs, although we doubt it would compare to its pre-scandal days. According to news sources, BW owner Dante Tan may sell his shares in BW, reminiscent of his recent cancellation of subscription in AHI shares, or may invite a new partner into the company. Macroasia Corp. likewise had a good run today, opening up 2.4% to P4.3 and in the process chalking up its most traded day in a year, before finally closing down 2.4% to P4.1. Nonetheless, had you purchased MAC at its low late May of P2.32, that would still translate to a 77% gain. One of the outstanding performers for the day was Global Equities which was pushed up 18.75% to P0.76. From its month low of P0.37, that represents a hefty 105% gain. What's more impressive though is that 69% of the gain came within the last two days. Like BW and MAC, GEI's volume for the day was way higher than the issue's average, indicating intensified speculation on the issue.

Changes among the sub-indices were benign as expected with most volatility being displayed by the oil sub-sector (-1.74%) and the property sub-sector (+1.45%). TEL has remained stable, closing at P780 for the third consecutive day. On the other hand, while MBT closed unchanged for the day at P203, the issue seems to be in a downtrend with accelerating volume. A factor that may be contributing to the issue's decline was the increase in NPL ratio of the commercial banking system to 14.46% at the end of April, compared to 14.06% at the end of March indicating a deterioration in the quality of banks' loan portfolio. Comparatively, EBC-PCI has fallen more than 15% from its P58 peso high in May, while BPI - which has a rare single digit NPL level - has risen by more than 8% since its May low. Another issue in a slack-off period is MERB which slid another P2.50 to close at P61.50 today. MERB has rallied by almost 34% in the early part of the month, but now seems to be retracing as it dropped almost 12% since that high.

Market Outlook

Pending any major surprises, the market seems to have settled to its current level. With the rising improbability of a US rate hike following signs that the US economy is slowing down combined with below target inflation YTD, the peso would likely be stable against the dollar. In turn this would lead the BSP to set aside any hikes in its overnight rates. The market itself seems settled with the current rates as shown by the ample tenders in yesterday’s T-bill auction and the BOT’s full awarding. Given a relatively stable monetary scenario, what we would look out for would be the fiscal components of the economy. Remember that with last year’s runaway budget deficit, the IMF has put the government in a tight fiscal leash. Look out for the collection results of the BIR and the BOC. If these turn out to be disheartening, expect the ghosts of privatization to haunt us. The government did include the proceeds from the sale of its Meralco and PNB shares in the deficit computation. Lastly, we’re as skeptical as the next guy regarding the peace talks with the MILF and the hostage negotiations with the bandit Abu Sayyaf.

June 13

Market Review

Market action was dull as the recent lack of violence in the headlines has been fully discounted into the stock prices. This was evident both in the lack trades with value turnover a shade under P1bn as well as the lack of volatility with the index trading in a very tight 6 point range for the day. At the end of the trading session, the index was marginally up 0.22 points to 1522.15 led by a few decently traded blue chips like SMPH and ALI. Any uptick was effectively countered by drops in MBT, MERB and BPC. All other index issues with the exception of PLDT which closed unchanged at P780 were sparsely traded.

BPC earlier announced that it would list a new unit at the Nasdaq in order to raise about $250mn-$300mnm. The unit will be an integrated broadband services company which will act as a holding company for Bayantel and Sky Cable. This would be in line with the company's own convergence plan which includes offering broadband services to businesses and individuals. Part of the proceeds would be used to build high-quality infrastructure for BPC's planned cell phone company. A cell phone arm would augment BPC's telecoms, media and cable interests. On the day, BPC was down 2.44% to P4. BPC has been on a recent decline, coming from a week high of P4.55, but has still shown improvement compared to its month low of P3.55.

Elsewhere in the region, most indices registered declines, following the drop in US indices last night. Singaporean shares fell 2% and Australia's index slipped 1.04% ahead of the May US retail sales figure announcement tonight. The same proved true for the Nikkei which ended 0.39% lower. South Koream shares succumbed to heavy profit taking to drop 4.89%, effectively ignoring the historic summit between the leaders of the two Koreas.

Market Outlook

We don’t expect much action from the market, unless the government pulls off a major political or military victory in the Mindanao situation. While this has certainly not been the worst international exposure that the country has received, it will be likely that foreign portfolio investors will put off any buy orders with that situation as an excuse. The uptick in recent weeks due to the relative calm may have moved the index back up to its equilibrium again and thus sideways action may be expected in the coming days.

June 12 - Nightfall

Oh I can't seem to get over this. Anyway, I'd like to invite you all to look at the new pictures I posted. I didn't really have the time to post these pictures before. They were taken earlier this year, either on my birthday or when I was in Corregidor. Come back soon.

June 12

Independence Day Edition

Ah yes. No work today. I thus have another day to tinker with my site. I realize my site was fast then, but I bet this one will be so much faster. I've cut down the size to just over 2K from 24K the last time. This is likewise my first site change that doesn't make use of a front page application. I'll talk stock market soon enough. In the meanwhile, check out my pages ok. Have a good independence day to you all. I'm outa here...

JUNE 6, 2000

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

Market Outlook

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

May 31

On Leave

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

May 21

Shaken not stirred

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

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

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

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

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

May 19

That old feeling

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

May 18

So wet yet so dry

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

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

Beware altophobics

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

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

May 15

On SMC and Coke

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

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

Gloomy like the weather

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

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

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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INS & OUTS & WHAT ABOUT

About the webmaster...

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

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

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

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

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

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