Common Sense Trading - A Blue Jeans Approach to Philippine Stock Market Trading

News of Manny Pacquiao's assets being frozen spread like wildfire the day after he beat Rios.  His victory, coming after a calamity, is seen to raise spirits of many Filipinos.  Yet, he faces another difficult fight back home.  The Philippine taxing authority wants Php2.2 billion from him in alleged back taxes.  That amount is larger than his net worth.  In U.S dollars that around fifty million. Taxing authorities in the Philippines have been way more aggressive lately and that probably helped the country to achieve its investment grade rating from all three major ratings agencies: Standard and Poor, Moody's, and Fitch.   (see:  http://www.philstar.com/business/2013/10/03/1240995/moodys-gives-phl-3rd-major-investment-grade-rating )

Here's a good article explaining why the Philippine economy has "good fundamentals" for economic growth. http://www.philstar.com/business/2013/11/28/1261583/phl-remains-star-performer-nomura

Okay, Okay, Okay. . . so I keep saying that Typhoon Haiyan (locally, Yolanda) shouldn't affect the stock market much. Let's consider some long term ripple effects.  Tacloban, which was hit hardest, is being called "ground zero" for  Philippine politicians and the emerging early campaign for the presidency.  This is something we might want to think about as we recall how politics has played a part in buoying the PSEi over the last couple of years. For one reason or another, President Aquino's administration has been good for the stock market.  Knowing who the future contenders makes for more than just good conversation.  It can help us prepare for how investments will be moved around.  If a stock market will be pushed down by external forces, there may be buying opportunities.  We'll want to have cash for that.  If it pushes the market sky high, we'd want to have a good inventory of stocks to sell. Vice president Binay was treated as almost a...

According to the Philippine Star (www.philstar.com), bargaining hunting halted the slump in the PSEi. http://www.philstar.com/business/2013/11/27/1261212/bargain-hunting-buoys-index-above-6000 My sense is that local investors will not be fazed by the news of the Typhoon.  With due respect to the victims, the fundamentals (for listed businesses) remain largely unchanged by the Typhoon.

So many people wonder how the Typhoon will affect the Philippine economy and what it will do to the Philippine stock market. This is a tricky question as the stock market is as easily affected by perceptions as it is by the fundamentals of the businesses that are listed. Here's what I think.  Everyone will be cautious.  Foreign money will keep to the sidelines longer and slowly the adventurous local investors will pick up blue chips and other stocks with attractive valuations. In other words, any trouble we may see won't be because of the Typhoon.  That said, I still find Philippine stocks to be overvalued and the current investment environment is not one that I would like to participate in. I've been reading through financial reports of Philippine companies and will update this blog for potentially good buys.  I'm afraid though that it will be a while before I find anything based on my methods.

Up and coming Philippine stock market expert Marvin Germo weighs in on whether the Philippine economy is a growing bubble. He thinks it is not a bubble. http://www.marvingermo.com/bubble-bubble-bubble-and-the-philippine-market-crash/

So I've been wondering since 2008 why there's a property boom.  I thought we were headed for trouble but that was still probably at least five years from now.  Well, I didn't really know what I was talking about because there was a lot of healthy growth in the property sector.  However, I may, and I stress the word may, have been on to something. Here's a link to an interesting article: http://iamkoream.com/miss-koreas-plastic-surgery-scandal-after-photos-surface/ Jesse Columbo, a contributor to forbes magazine believes there is a bubble forming in emerging markets.  What has piqued my interest is that he believes the Phippines is part of that. I dispute his predictions about the Philippine economy, in general.  I agree with him that there are signs of a bubble for property and stock but there are characteristics of the Philippine economy that make me believe this bubble will leave much of our population unaffected.  My position is that the Philippi...

STI burned many. The share price in the last ten or twelve months dropped from Php2+ to well below Php1. For those who bought, it sucks, right? I say don't sell just yet. What about the saying buy low sell high? If you sell now, you'd have successfully bought high and sold low. I'm saying this because the company seems rather profitable and asset rich. The latest annual report shows that STI holds over Php8 billion in assets and just raked in over Php700 million. That's almost ten percent. I say it's a steal at its current price of Php0.69. There's a few other reasons why i like STI. It is generally controlled by the Tangco group of companies. I don't know them but I read up on Mr. Eusebio Tangco. He seems reliable. Sometimes that is all we need to know. It also helps that STI has a good number of land and building assets. Mr. Warren Buffet advises not to invest in a business you don't understand. Well, I think STI's business ...

Just over three years ago, I made the following entry: http://csensetrading.blogspot.com/2010/06/place-your-bets.html Without over thinking, I picked some common sense, good buys, as follows: ICT (28.50) ATI (5.3) MWC (15.25) SECB (63.00) The most recent close of the same stocks are as follows: ICT (106.3) ATI (11.5) MWC (25.5) SECB (137.5) Only MWC did not double in three (3) years. Not bad for simple investing.

Early warnings from experts Last 26 July 2011, PDI published an article quoting market investment guru Mark Mobius . Mobius said that local stock valuations were now high compared with emerging market peers. That was in July last year. At the start of that month, the Philippine Stock Index (PSEi) was in the low 4,000s . The market didn't look back and zoomed up, convicingly past the 6000 mark in February of this year. I'd be very careful if I were going to buy Philippine stocks any time soon. Nomura, a top Japanese bank has a good explanation of why Philippine stocks are expensive. Click here to read about it.