7:45pm  Thursday  3 September 2009   Philippine stock Exchange Index  2803.31 (-0.17%)

Today, I walked over to the Ayala trading floor of the PSE and had coffee over a meeting at the exchange’s Brokers Lounge.  There was quite a good number of people in the gallery section looking down into the exchange’s trading floor.  The lounge itself was not filled with people and the trading floor did not seem to buzz with activity.  If I did not know that a lot of trades were now being done off-site, I would think that no one was interested in the market.  Actually, a lot of trades are now matched on-line as more Filipinos all over – throughout the country and some overseas – have become used to accessing the market through the internet.  Data from the PSE reveal that there is greater participation of Filipinos in the market, around 70% against 30% foreign fund managers, compared to previous years when it was the other way around – 70% foreign.  To me, that is excellent news.  That really tells me that the base of this market will surely be bigger as the year goes and more Filipinos will grow wealthy.

When the market took the index down 34 points this morning, there was nothing but calm among traders.  I guess many are of the belief that sentiment is positive which was rightly so.  At the end of the day, the market was down just 4.9 points.  Unlike yesterday, there were a number of gainers today – FLI, EDC, AC, GEO, FGEN, TUNA, MWC & BPC; this was just among the 20 most active.  Those that were sold off earlier such as AGI, MER, FPH, AC, BPI, FLI, TEL & ALI recovered at the close.  I would say most people saw this correction coming.  While I would not be so hasty as to say that declines are over, I would not want to be so anxious that I abandon all my positions.

Looking around us, Shanghai which lost 6.7% last Monday, gained 4.8% today.  The Hang Seng traded in the same direction though gaining a little less, up 1.2%. The rest of Asia was mixed with the Nikkei down 0.6% while Singapore, Jakarta and Thailand gaining well over 1%.  The hungry ghost which people were expecting to spook investors isn’t looking so hungry yet.

The big picture has not changed.  The OECD is saying that the global recession is coming to an end faster than they had earlier expected.  On a top-down perspective, the macroeconomic picture continues to show signs of sustained improvement both in the global scene and in our domestic situation.  Even the PHP/$ which had lost gound over the past month going from below 47 to above 49 is now hovering in the 48.84 level.  It just so happened that import season in preparation for Christmas is at its peak.  With the PHP so cheap, I think opportunistic investors from overseas will see carry trade situations in fixed income as well as equities.  I think the Php will start to swing back to strength, and I see foreign funds closely following.

September is normally a dreadful month for stocks.  As long as we know that, we’ll be alright.  Remember, the horizon is what to look at and not the waves.  That way, the seas do not seem so rough after all.


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