9:00am Monday July 6, 2009 PSEi (Friday close) – 2431.34 (-0.27%)
It was a long weekend in the U.S. so we will be seeing very little influence from market sentiment in New York. European markets were mixed on Friday, but they hardly affect our market. The Hang Seng was marginally up on Friday, but that did not affect our market as well. We were down 6 points, pretty marginal considering that we were reacting to a 213 point decline in the Dow.
It looks to me that domestic factors will be more of a concern to investors. The positives are that term yields in the government market has declined around 20 basis points in 10 year maturity. The short term cash market also looks flushed with the BSP confirming that it is still in an easing mode.
Stocks should be underpinned by the over-all liquidity among investors which I believe to beat levels higher than they can manage. We saw declining value turnover in the stock market over the past week with index itself losing 46 points. It appears to me that investors are not in a hurry to get back into cash. Market players look to be comfortable holding positions at current levels seeing that the market had declined 25 points, Friday, but recovered to close down 6. My guess is that even if there is bad news or large declines in the U.S., for as long as the neighborhood in Asia remains constructive, Philippine stocks will be able to hold its own.
In the end, I think the strategy is to continue to buy on weakness without ignoring the intrinsic value of the stocks you buy.
Have a good week.