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8:25  Thursday  15 July 2010  Philippine Stock Echange Index  3472.33 (before the open)

This market is unbelievable.  I was thinking that prices were already too high, but it continues to surge.  Of course, high prices do not mean that stocks are already expensive.  The market is dynamic and will continue to adjust to changing conditions.  I can only surmise that investors perceive that conditions are changing constructively.  Long term interest rates are steadily declining which will likely bring more money into the housing market.  That trend will be positive for the economy.  I think that yesterday’s excellent performance from the property sector is telling us that there is future strength in the sector.  ALI, MEG, FLI, VLL and even DMC should benefit from this move.

I also think that lower interest rates will be good for TEL which pay excellent dividends presently running at around 8.8% yield.  I think the IPPs will even become stronger as CAPEX will be more accessible as money flocks into the debt capital markets.

Over-all, I sense a very strong momentum in our market which will likely take us to the next level, i.e. above 3500 in the PSEi.  We may see some consolidation, but that may be quite shallow.  I was one who thought that a sell-off was in the wings, but we have exceeded a resistance which I originally thought to have been just above 3300.  Where we are right now, we appear to be assaulting the 3500 marker with relative ease.

I guess I’ve underestimated the power of local money.  Perhaps, more are getting convinced that cash will not return anything just lying around in SDAs.  People are probably becoming more diligent.  Actually, if the ordinary Filipino wants to take advantage of the market but does not know how to handle it, they should be told about mutual funds which have been performing excellent service for their customers over the last few years.

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