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5:00pm  Friday  14 May 2010  Philippine Stock Exchange Index   330.42 (+0.08)

We had a shortened trading week due to election on Monday, May 10.  We also had a good week because of the same elections.  All the conspiracy theories about failure of elections and troubles that would accompany the failure turned out to be nothing more than a theory.  The wisdom of the market place would have been a better gauge of the election outcome rather than all these fears and anxieties of those who were even far removed from the market.  I always believed that those who are willing to risk money for their views have a better handle of the things to come.

This country never ceases to scrounge up doomsday theories.  The media now abounds with stories of how GMA will control congress as a number of Lakas-Kampi congressmen have been voted in.  My personal thoughts are that these same congressmen will be changing colors as soon as Noynoy is proclaimed.  These guys know who butters the bread, and it is not one of the congressional colleagues.  My fearless forecast is that GMA in a few months will be relegated to the dustbin of history.

I am very pleased with the performance of financials this week with MBT leading the pack.  I had always thought that the private placement at 48 was a pure diversionary factor in the market.  The portfolios that bought the block could not have been flippers (tsupiteros); they were serious portfolio managers who had seen MBT as one of the cheapest banks among a host of globally recognized banks.  I think I will not be exaggerating if I said that MBT is undoubtedly the leading bank in the Philippines.  BDO may be more visible because of its relation to the SM group, but it does not have the solid history in banking that MBT has.  BDO may be big in numbers, but they are relatively new comers to big league banking.  They simply merged their way to the big leagues.  On the other hand, MBT has a track record of organic growth over the many years of its existence as a commercial and universal bank.  While MBT had their share of M&A, it was never in the same magnitude as when BDO acquired Equitable -PCI a few years back.  Anyway, MBT will be headed further north of 56.50 where it closed today.  Having said that, we are seeing the financial sector of the market continuing to move higher.

In the power generations sector, the big jump in FGEN and the strong support levels on AP and EDC tells us that the sector will follow whatever rally the broad market does.  FPH will continue to move closer to its perceived net asset value of around 70.

MER moved in the opposite direction of the market, but I believe that should be temporary.  With DMC and ICT also going lower, I think iprices of these stocks ease some more, it will really be an opportunity to buy these exceptional performers at cheap levels.

I think this time MPI, PIP and AGI will lag.

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