June 18, 2001

CORRECT MOVE

There was a notable lack of interest in the market today, as investors expected a technical correction following six straight days of registering gains. Dipping by 8.38 points, the market succumbed to selling pressure even as most investors decided to stay in the sidelines. The result was that more issues showed declines, while value turnover dipped considerably after days of breaking through the P500mn level. As it was during the previous week's rally, PLDT was once again an accurate barometer of the market. Taking the lion's share of the trade for the past week, PLDT's volume for the day was less than half its 30-day average. While the issue briefly flirted with a P5 gain in mid-trade, in the end it closed flat at P725.

Some issues, like BPC weren't so lucky. After peaking at P2.14 three sessions ago, it has grown considerably weaker afterwards. Today it lost another 8.16% and settled at P1.8. While the issue does look ripe for a correction, it's weekly chart still looks hopeful. With a little luck, and perhaps the final approval of the government for its requested water rate hike, BPC may commence recovery with the index after a two to three day consolidation period.

Meanwhile, port operator ICTS said that its selling price for its ICTSI International Holdings Corp and Ensenada Cruiseport to Hutchinson International Holdings would reach $400mn. The sale has been the only relevant news about the company during the issue's run-up in recent weeks. The announcement however came after the wake of a negative reversal signal of the issue's daily chart last Friday. Thus, today's dip would only serve to validate that signal. Despite rumors of ICT peaking past the P4 level, we believe it will be a while before the issue breaks out again. Today however, the issue did give a mighty try, trading as much as 13% up at P3.4, but it lost steam in the end, falling steadily to as low as P3 before closing at P3.1.

In other news, MEG disclosed that it will use FAIR as its mass-housing vehicle, citing the company's relative weakness in that sector. MEG slipped by 1.23% to P0.8 while fair added 1.79%^ to close at P0.57. The news however, seemed to have given ELI an unexpected boost, rising by as much as 11%, but closed with the gain halved to 5.88%. ELI was last traded at P0.36.

We believe the index, now at 1470.92 could dip to about 1450 before staging a recovery. Should the index breach that level, we can expect to be down week on week.