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9:45 am  Wednesday  23 June 2010   Philippine stock Exchange Index  3336.79

The Philippine market may have gone down a touch Tuesday, but from where I sit, it did not seem that it did.  The stocks that I was very positive with – MBT, DMC and PNB were all up.  Only EDC was down and by only a fluctuation.  I came to the conclusion when the market closed that all was still well.  I reckon the ones holding TEL and ICT were the only ones that felt the drop of the market.

Anyway, I cannot instinctively reduce my positions for the time being because I cannot help but feel that money is still finding its way into the Philippine market from abroad.  The Asian and European markets are all easing from their bounce yesterday.  It might be that the initial spurt arising from the more flexible reminbi could be running into trouble.  Personally, I like the skepticism.  It tells me that many are underestimating the stronger weight of reminbi in the market.  Many western investment portfolios are probably under allocated in East Asian markets.  Unfortunately, much of their European portfolios could be underwater and funds are unable to rotate out of old positions.  The irony in the local market is that players are always waiting for the foreigners to make the first move.  People have such short memories; if you look back to last year’s rally, it was fueled first and foremost by local funds.

I maintain the view that what would take us to the next higher level will be the locals with greater participation of institutional funds.  The westerners are just too zapped out with one financial crisis after another.  In the meantime, the money that has come home to the Philippines is still waiting to be put to work.

I would approach the market with some caution by continuing to avoid speculative plays or stocks that are being jockeyed.  There will be special situations or recovery plays, but one has to be very careful in picking them out.  It could be a day to buy on weakness as stocks like DGTL, DMC, AP, JGS, URC and MBT are pulling back a touch.  There had been some interest in BPC as the stock starts to recover.  I think BPC, EDC, FGEN and MPI are similarly resting at the lows of their trading ranges.  If I am correct and today’s weakness is a simple consolidation, then we could be up for good times ahead.  I guess, you just have to trade the ranges considering that this sector – the power sector – is firmly in its growth path.

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