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The information contained herein is based on sources which we believe are reliable, but is not
guaranteed by us and is not to be considered all inclusive. It is not to be construed as an
offer or solicitation of an offer to sell or buy the securities herein mentioned. This firm and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and
may make purchases and/or sales of the securities from time to time in the open-market and
otherwise.
Still Waiting
by Prince Anthony A. Yeung
Friday, June 25, 2010
After
five attempts, the local stock market is still waiting for a
conclusive rally past the resistance at 3,330. On Monday (June 21,
2010), the PSEi established a new YTD high at 3,357.88 but fell
during the next trading days. Investors have been very optimistic
lately and have been trying to push the main index higher and higher.
While local developments have cooperated for the most part, external
factors have kept the PSEi from moving further higher. This run up to
a new YTD high was led by stocks such as ICTSI (ICT), Ayala Land
(ALI), and Aboitiz Equity Ventures (AEV). PLDT (TEL) has continued to
under-perform relative to the market as the index heavyweight has
been flat.
For
the week, the main index was flat. The PSEi ended at 3,352.46, a gain
of 16.98 points or 0.51%. After posting a gain on Monday (June 21,
2010), the main index trekked lower during the rest of the week. The
loss, however, were minimal as sentiment remained optimistic. Trading
activity was slightly higher, boosted by some block sales and
unusually high interest on certain stocks. An average of 2.48 billion
shares amounting to P3.8 billion changed hands each day. Decliners
beat advancers in 3 out of 5 trading days.
Generally,
the local environment has encouraged the upward movement of the local
stock market. The local economy is seen to perform better than
initially expected as the El Nino is over, pump-priming by the
government boosted first quarter growth, and remittances continue to
be strong. Furthermore, the country is looking forward to a new
administration that is keen on reducing corruption. The incumbent
administration makes way for that of President-elect Aquino next
week. The inauguration is scheduled for June 30, 2010 (Wednesday),
which has been declared a holiday. A persistent problem of the
government has been the budget deficit, which is just about the only
negative among the many local economic data. It is expected that the
first half budget deficit will be larger than the scheduled P142
billion.
There
were several interesting stories throughout the week that kept
investors active. One is Semirara's (SCC) impressive performance
ahead of the ex-date of its 1:5 stock rights offering on Friday (June
25, 2010). The stocks reached as high as P92.00 before dropping on
Friday (closed at P85.50 due to a combination of the rights offering
price adjustment and profit taking). The coal mining arm of the
Consunji group, SCC is also into the power business after acquiring
the Calaca coal power plant late last year. Another is the strong
rise of the price of Metrobank (MBT). For the week, MBT gained P5.50
or 9.57% and closed at P63.00. Metrobank had a better than expected
first quarter, earnings P2.5 billion. The P2.5 billion was also
higher than the first quarter earnings of BDO and BPI even if both
have larger market caps than MBT.
Eager
Ending
the week on a good note, the PSEi is still poised to reach new
heights next week, which will be shortened due to the holiday on June
30, 2010. The index, however, will have to find new heroes if it is
to move higher. Metrobank gave the main index a good ending with its
spectacular performance on Friday but the stock may succumb to profit
taking after gaining so much during the week that was. PLDT (TEL)
showed some life on Friday, but it will have to do better if the
market is to climb further. Those expecting window dressing on Monday
and Tuesday, which are the last days of June, may be disappointed.
The index is currently near its YTD high while most stocks are at
high prices. The act of window dressing is moot given the the price
levels right now. The DOW is nearer to 10,000 than it is to 11,000.
It will have to move significantly higher, much like TEL has to, for
the PSEi to set new highs next week. Wednesday next week is not only
the start of the 2nd
half of 2010 but is
also the start of the Aquino administration. Prices are high and
investors should look to take profit in stocks that have already
experienced significant run ups. While investors are eager to push
the index higher and higher, the time may not yet be right.
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