First Metro Asset Management Inc

IN THE BACK SEAT by Gus Cosio

12:15 am  Wednesday  28 July 2010

I am sitting back from the market for a while since I will be on the road again this week.  I’ll be doing some investment briefing to some people in Cebu on Thursday and Friday.  The good thing about detaching yourself from the market for a few days is that you can take a longer and wider view of what the outlook could be.

One thing that I found out from one of my research sources is that if we had decouple completely from the DJIA in the 2nd quarter, in these past few weeks of July, our correlation with the Dow is back to a level which is even slightly higher than in the first quarter.  I guess because the U.S. market has been getting a series of positive earnings surprises,  the constructiveness our own market was being reinforced.

When I try to take a look at the domestic front from both the macroeconomic perspective and the earnings forecasts of the stocks I follow, the landscape looks quite encouraging.  The thought makes it easy for me to just hold my positions while I try to ignore it for the next few days.

For those who may be curious of my plan for my PNB position over this week, I feel very comfortable holding it because, having thought about it earlier today, I would have been happy to buy the stock again today.  For stock like DGTL or MBT, they are also at levels that I am comfortable with, although i would like to pick up MBT perhaps 2 pesos lower.

I am also a bit surprised that TEL is cheap in Manila compared to its ADR in New York.  It may be because people are now expecting the peso to start gaining on the U.S. currency.  It is no wonder, as well, that RCB has spiked up.  It will be paying a second dividend for 2010 in the coming weeks.  Such a declaration gives impetus to the notion that quarterly earnings are rising.

Anyway, I’ll share more of my thoughts when I find some time while at rest during the week.  In the meantime, be careful, but be involved.

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First Metro Asset Management Inc