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8:30 am  Monday  2 April 2012

We will have only 3 trading days in the Philippine stock market this week as the country goes out for Easter break.  Normally, trading activity slows down because of the smaller trading window plus the fact that many are looking forward to their holiday plans.  Some may have already taken the entire week off.  This pattern is true not just in the Philippines but may even be more pronounced in the major financial centers where investors, traders and portfolio managers take their vacations very seriously.  Should we see any weakness in the market this week, I believe it should be no cause for worry since it would be more of a seasonal behavior of the market.

The long term prospect of Philippine stocks remain positive.  We are seeing an economy getting greater traction as government pushes spending early in the year in order to avoid the mistakes made last year.  The Department of Budget and Management had mentioned that funds have already been disbursed to the implementing agencies, and should be filtering down to the projects being undertaken.  Such a move should fuel consumer spending in most urban centers as well as the countryside.

Such a move augurs well for practically every sector of the stock market.  Many analysts are bullish on banks because they believe that as far as consumer behavior is concerned, banks stand to benefit from higher activity on credit cards, motor vehicle loans and mortgages.  Moreover, infrastructure projects that get started this year will surely draw a lot of financing need from the project managers and contractors.  Banks that are high on the buy list of fund managers are probably MBT and SECB with PNB starting to gather a permanent following.  Of course, the infrastructure companies like DMC and MPI would directly benefit as well.

One stock that has so far been under-performing this rally is PCOR.  While most stock prices have gone north, PCOR slipped to its lowest levels in many months.  Some investors may have been totally spooked by the sale of 695,300,000 common shares from the employee retirement fund at 11 per share.  In retrospect, we an see that it was done merely to raise public ownership level which now stands  at 14.68%.  Personally, I think this is good for the stock since the public float sets it up for greater liquidity.  With the acquisition of ESSO Malaysia being completed, we could see a game changer for the company.  PCOR may be a stock to watch considering that it showed a 7.6 percent increase in earnings for 2011 or P8.5 billion from P7.9 billion in 2010 driven by exports and petrochemical sales.

Anyway, the prospects continue to be on the side of investors.  Interest rates are stable even as bond yields crept up a bit last week.  We could see some more backing up of bond yields which should help fixed income investors deploy cash at better yield levels.  Nevertheless, I do not see a drastic move in bond yields over the coming weeks which can potentially upset the financial markets.  If at all, we are still on cruising speed hoping to go on overdrive soon.

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