September 12, 2001
Financial Shock
When we noted that the local bourse will track the developments in the US, the day's terrorist attacks are not quite what we had in mind. Nonetheless, Philippine investors fell prey to "worry selling" (as against full blown panic selling) causing the PHISIX dropping 52.7 points to its three-year low. Nearly every issue traded posted losses, with only nine managing to trade up.
Turnover swelled, but not exactly to the billions that we feared. It reached P624mn, as against the below P400mn average that we have been experiencing. Perhaps it helped that portfolio investors had been selling off their Philippine equities for months. Otherwise, today's dip could have been more dramatic.
Elsewhere in the world, bourses that opened likewise experienced a selling frenzy. Investors' worries range from worldwide recession to a new world war. After all, the US is expected to retaliate, with US President Bush saying that they will make no distinction between terrorists and those who harbor the same.
In any case, for investors hunting for bargains in the market, take note of the following major blue chips that posted significant declines for the day: SLC (-12% to P990), SMPH (-9.09% to P6), TEL (-8.72% to P497.5), FDC (-6.98% to P0.8), DGTL (-6.25% to P0.45), MPC (-6.06% to P0.31), PCOR (-5.81% to P1.62), MERB (-5.49% to P43) and BPC (-5.41% to P43).
SLC, which at the height of the speculation against the peso months ago became the safe haven for investors' funds, today took on a new role as the stock to avoid. The same of course would hold true for MFC (-12.59% to P1250). Both insurance firms have assets primarily in the US and Canada. With thousands of people feared dead from the attacks, expect claims to pile up against insurance firms. Consequently, expect profits and share prices to tumble.
At this point, it may be too early to speculate on what will transpire in the coming months. For sure however, bourses worldwide must contend with uncertainties, not just in economic terms, but in peace and order issues as well. As is, the US and the rest of the world already speculate that Middle East terrorist forces are behind the attack. Should there be a standoff, we may see world crude oil prices spike back to or even exceed the Gulf War levels.
Reviewing today's performance, we believe the 50-point drop is a knee jerk reaction; an act of shock. In assessing potential repercussions in the world climate, we surmise that 50 points is probably not enough.
Wednesday, September 12, 2001
Tuesday, September 11, 2001
September 11, 2001
A Perspective
It's been a while hasn't it? And I've been saying that with greater frequency. Well my apologies to you site readers. I have been preoccupied with a lot of things. First of all, I'd like to congratulate my really good friend Anj, who got married last September 8. Too bad for single guys. She's one of the most engaging conversationalists I've ever come across. But back to the market now.
And so the Phisix is once again below the 1,300 level. A couple of weeks ago (or was it over a month already), I took a chance at three major issues. I bought TEL, MERB and AC. It was the gambler in me. After all, it has been a while since I put my money where my mouth is. The first two traded at 8-year lows, while AC was technically battered. Among the three, MERB has performed mightily, rising from P37.50 to P48 yesterday. Yummy profits for those who opted to wait.
TEL on the other hand came tumbling down. Just a while ago, I read a couple of articles detailing the gore of the telecommunications industry in the US. Gosh, these companies are HEAVILY indebted. The conservative analyst in me would accept a 1:1 debt / equity ratio. But these telcos, according to the articles had DE ratios of over 10. Eek! And thus, with the dotcom meltdown, the telcos lost the market's favor. In a way, that happened to PLDT too. Plagued by the very same heavy capital expenditures and resulting debts, the company was on the verge of breaching a debt covenant with its creditors. And boy did the foreign brokers sell when that report came out. And so came TEL, tumbling down to P475. Do you even remember when PLDT last traded at those levels? Not in my stock trading lifetime. Well, the issue almost singlehandedly brought the rest of the index down with it.
Am I optimistic on the stock? Well, I really just bought it because it was relatively dirt cheap. But I was never a PLDT fan to begin with. Assuming the company manages to stay afloat by refinancing all its debts, can it actually pare down its obligations in the coming years? I really don't think so. By the time the company would have enough cash flows to cut down its debt, it would probably be time to shell out billions again to prepare for 3G. That's some pretty expensive technology you got there.
Now let's look at the US economy. Alan and friends have been very aggressive with those rate cuts huh? "No to recession!" they seem to be chanting. But the dotcom meltdown isn't over at all. In fact, the massive debts of these technology companies will take their toll on financial institutions next. Imagine billions of dollars that cannot be collected. They may just find that their banking industry NPLs have already equaled ours. I wonder if they have a PNB counterpart. Yikes. In any case, the point is that an economy can be likened to a chain of industries. Prick one of those and expect the effects to spread. Let's spell contagion.
As for poor ol' country, well we better find an alternative major export market soon. It's either that or we focus on developing internal demand. What are the chances of that? Not optimistic I think.
Jollibee could be great in times like these. Can you think of a better cash cow? But even JFC is having a hard time maintaining its finances. For the first time in years, JFC had to resort to debt financing. Oh well, perhaps when that commissary is finally finished, we'll see a clean balance sheeted JFC again. SMC could be a candidate, but my principles cannot stomach recommending a Cojuangco-led company. What else? What else?
Any suggestions?
A Perspective
It's been a while hasn't it? And I've been saying that with greater frequency. Well my apologies to you site readers. I have been preoccupied with a lot of things. First of all, I'd like to congratulate my really good friend Anj, who got married last September 8. Too bad for single guys. She's one of the most engaging conversationalists I've ever come across. But back to the market now.
And so the Phisix is once again below the 1,300 level. A couple of weeks ago (or was it over a month already), I took a chance at three major issues. I bought TEL, MERB and AC. It was the gambler in me. After all, it has been a while since I put my money where my mouth is. The first two traded at 8-year lows, while AC was technically battered. Among the three, MERB has performed mightily, rising from P37.50 to P48 yesterday. Yummy profits for those who opted to wait.
TEL on the other hand came tumbling down. Just a while ago, I read a couple of articles detailing the gore of the telecommunications industry in the US. Gosh, these companies are HEAVILY indebted. The conservative analyst in me would accept a 1:1 debt / equity ratio. But these telcos, according to the articles had DE ratios of over 10. Eek! And thus, with the dotcom meltdown, the telcos lost the market's favor. In a way, that happened to PLDT too. Plagued by the very same heavy capital expenditures and resulting debts, the company was on the verge of breaching a debt covenant with its creditors. And boy did the foreign brokers sell when that report came out. And so came TEL, tumbling down to P475. Do you even remember when PLDT last traded at those levels? Not in my stock trading lifetime. Well, the issue almost singlehandedly brought the rest of the index down with it.
Am I optimistic on the stock? Well, I really just bought it because it was relatively dirt cheap. But I was never a PLDT fan to begin with. Assuming the company manages to stay afloat by refinancing all its debts, can it actually pare down its obligations in the coming years? I really don't think so. By the time the company would have enough cash flows to cut down its debt, it would probably be time to shell out billions again to prepare for 3G. That's some pretty expensive technology you got there.
Now let's look at the US economy. Alan and friends have been very aggressive with those rate cuts huh? "No to recession!" they seem to be chanting. But the dotcom meltdown isn't over at all. In fact, the massive debts of these technology companies will take their toll on financial institutions next. Imagine billions of dollars that cannot be collected. They may just find that their banking industry NPLs have already equaled ours. I wonder if they have a PNB counterpart. Yikes. In any case, the point is that an economy can be likened to a chain of industries. Prick one of those and expect the effects to spread. Let's spell contagion.
As for poor ol' country, well we better find an alternative major export market soon. It's either that or we focus on developing internal demand. What are the chances of that? Not optimistic I think.
Jollibee could be great in times like these. Can you think of a better cash cow? But even JFC is having a hard time maintaining its finances. For the first time in years, JFC had to resort to debt financing. Oh well, perhaps when that commissary is finally finished, we'll see a clean balance sheeted JFC again. SMC could be a candidate, but my principles cannot stomach recommending a Cojuangco-led company. What else? What else?
Any suggestions?
September 11, 2001
A Perspective
It's been a while hasn't it? And I've been saying that with greater frequency. Well my apologies to you site readers. I have been preoccupied with a lot of things. First of all, I'd like to congratulate my really good friend Anj, who got married last September 8. Too bad for single guys. She's one of the most engaging conversationalists I've ever come across. But back to the market now.
And so the Phisix is once again below the 1,300 level. A couple of weeks ago (or was it over a month already), I took a chance at three major issues. I bought TEL, MERB and AC. It was the gambler in me. After all, it has been a while since I put my money where my mouth is. The first two traded at 8-year lows, while AC was technically battered. Among the three, MERB has performed mightily, rising from P37.50 to P48 yesterday. Yummy profits for those who opted to wait.
TEL on the other hand came tumbling down. Just a while ago, I read a couple of articles detailing the gore of the telecommunications industry in the US. Gosh, these companies are HEAVILY indebted. The conservative analyst in me would accept a 1:1 debt / equity ratio. But these telcos, according to the articles had DE ratios of over 10. Eek! And thus, with the dotcom meltdown, the telcos lost the market's favor. In a way, that happened to PLDT too. Plagued by the very same heavy capital expenditures and resulting debts, the company was on the verge of breaching a debt covenant with its creditors. And boy did the foreign brokers sell when that report came out. And so came TEL, tumbling down to P475. Do you even remember when PLDT last traded at those levels? Not in my stock trading lifetime. Well, the issue almost singlehandedly brought the rest of the index down with it.
Am I optimistic on the stock? Well, I really just bought it because it was relatively dirt cheap. But I was never a PLDT fan to begin with. Assuming the company manages to stay afloat by refinancing all its debts, can it actually pare down its obligations in the coming years? I really don't think so. By the time the company would have enough cash flows to cut down its debt, it would probably be time to shell out billions again to prepare for 3G. That's some pretty expensive technology you got there.
Now let's look at the US economy. Alan and friends have been very aggressive with those rate cuts huh? "No to recession!" they seem to be chanting. But the dotcom meltdown isn't over at all. In fact, the massive debts of these technology companies will take their toll on financial institutions next. Imagine billions of dollars that cannot be collected. They may just find that their banking industry NPLs have already equaled ours. I wonder if they have a PNB counterpart. Yikes. In any case, the point is that an economy can be likened to a chain of industries. Prick one of those and expect the effects to spread. Let's spell contagion.
As for poor ol' country, well we better find an alternative major export market soon. It's either that or we focus on developing internal demand. What are the chances of that? Not optimistic I think.
Jollibee could be great in times like these. Can you think of a better cash cow? But even JFC is having a hard time maintaining its finances. For the first time in years, JFC had to resort to debt financing. Oh well, perhaps when that commissary is finally finished, we'll see a clean balance sheeted JFC again. SMC could be a candidate, but my principles cannot stomach recommending a Cojuangco-led company. What else? What else?
Any suggestions?
A Perspective
It's been a while hasn't it? And I've been saying that with greater frequency. Well my apologies to you site readers. I have been preoccupied with a lot of things. First of all, I'd like to congratulate my really good friend Anj, who got married last September 8. Too bad for single guys. She's one of the most engaging conversationalists I've ever come across. But back to the market now.
And so the Phisix is once again below the 1,300 level. A couple of weeks ago (or was it over a month already), I took a chance at three major issues. I bought TEL, MERB and AC. It was the gambler in me. After all, it has been a while since I put my money where my mouth is. The first two traded at 8-year lows, while AC was technically battered. Among the three, MERB has performed mightily, rising from P37.50 to P48 yesterday. Yummy profits for those who opted to wait.
TEL on the other hand came tumbling down. Just a while ago, I read a couple of articles detailing the gore of the telecommunications industry in the US. Gosh, these companies are HEAVILY indebted. The conservative analyst in me would accept a 1:1 debt / equity ratio. But these telcos, according to the articles had DE ratios of over 10. Eek! And thus, with the dotcom meltdown, the telcos lost the market's favor. In a way, that happened to PLDT too. Plagued by the very same heavy capital expenditures and resulting debts, the company was on the verge of breaching a debt covenant with its creditors. And boy did the foreign brokers sell when that report came out. And so came TEL, tumbling down to P475. Do you even remember when PLDT last traded at those levels? Not in my stock trading lifetime. Well, the issue almost singlehandedly brought the rest of the index down with it.
Am I optimistic on the stock? Well, I really just bought it because it was relatively dirt cheap. But I was never a PLDT fan to begin with. Assuming the company manages to stay afloat by refinancing all its debts, can it actually pare down its obligations in the coming years? I really don't think so. By the time the company would have enough cash flows to cut down its debt, it would probably be time to shell out billions again to prepare for 3G. That's some pretty expensive technology you got there.
Now let's look at the US economy. Alan and friends have been very aggressive with those rate cuts huh? "No to recession!" they seem to be chanting. But the dotcom meltdown isn't over at all. In fact, the massive debts of these technology companies will take their toll on financial institutions next. Imagine billions of dollars that cannot be collected. They may just find that their banking industry NPLs have already equaled ours. I wonder if they have a PNB counterpart. Yikes. In any case, the point is that an economy can be likened to a chain of industries. Prick one of those and expect the effects to spread. Let's spell contagion.
As for poor ol' country, well we better find an alternative major export market soon. It's either that or we focus on developing internal demand. What are the chances of that? Not optimistic I think.
Jollibee could be great in times like these. Can you think of a better cash cow? But even JFC is having a hard time maintaining its finances. For the first time in years, JFC had to resort to debt financing. Oh well, perhaps when that commissary is finally finished, we'll see a clean balance sheeted JFC again. SMC could be a candidate, but my principles cannot stomach recommending a Cojuangco-led company. What else? What else?
Any suggestions?
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