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9:30 am  Wednesday  2 September 2009  Philippine Stock Exchange Index   2852.93 (-1.08%) Tuesday Close

I must admit, the Philippine equities market has become a lot deeper than it was compared to the beginnings of the rallies in previous years.  Since we came out of the March bottom, value turnover had progressively gone higher.  Turnover was barely Php 2 billion in March and early April.  When the rally gathered steam, there were volume spikes where the market turnover topped Php 5 billion not counting any block trades done.  Lately, we’d been averaging above Php3B on a normal day and above Php4B when a good play is going on.  Of course, this is comparatively small when set side by side with our Asean neighbors, but domestically, it should be very encouraging for Philippine based investors.

This current rally had been sparked, fueled and sustained widely by domestic investors.  Rallies in the past were almost purely foreign investor led which was why those rallies had very wide swings.  Consequently, those rallies fizzled out when foreign fund managers pulled out.  The evidence in this strong upswing that we’ve had since March is that in its early stages, foreign fund managers were net sellers as tabulated by the PSE statisticians.  And during the few shallow dips that we saw inside this trend, there was also net foreign selling.  The progress of the Philippine market can be gleaned from the domestic investors picking up the slack when foreign funds were heading for the exit.  I see that as strong evidence that we can look forward to a stronger market down the road.

In yesterday’s session, the market opened 27 points below Friday’s close and traded down 48 points after an hour of trading.  That it closed only 31 points down for the day is very encouraging.  We are seeing investors nibbling on dips and the value turnover of Php 3.29 billion tells me that commitment to the market has not gone away.  The rest of Asia is stabilizing after Monday’s sell off.  Shanghai is up adding 0.6% to the SSEC while the Hang Seng gained 0.75% for the day.  The way it looks, the PSE index simply played catch up for being closed on Monday.

If there is one stock that is looking like a trading buy is Meralco (MER).  Technical indicators point to an oversold condition for this stock and none of the liquid stocks looks as battered as MER for the time being.  Otherwise, I will continue to avoid the blue chips but will continue to keep an eye on the issues in play like AGI, ISM, WEB, LC, PIP, SINO, PNB and the like.  Opportunities abound.  We just have to keep on looking.

Unfortunately, New York closed 1.96% lower on the DJIA and 2.21% on the S&P 500.  That does not bode for over-all sentiment on equities.  I think the prudent thing to do is to raise some cash by taking profits on some old positions.  The dust will probably settle in a week or so, and we can have a better picture of where this market is going.  Remember, this market is moving towards maturity.  That would suggest that investors are also becoming more strategically minded in managing positions.  I reckon most will follow the prevailing global sentiment.

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