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admin
01-07-2013, 11:11 AM
ABS-CBNnews.com
Posted at 01/07/2013 10:19 AM | Updated as of 01/07/2013 10:37 AM


MANILA, Philippines - The Philippine Stock Exchange index (PSEi) breached the 6,000 level for the first time on Monday morning, taking many by surprise.

Brokers cheered as the PSEi hit 6,001.17 at 9:40 a.m. As of 10:08 a.m., stocks hit 6,015.03 up 0.73%.

This is the fourth time the PSEi set a new record high in as many trading days in 2013.

April Lee-Tan, COL Financial group research head, attributed the market rally to improvement in general sentiment and liquidity.

"During the second half of 2012, everybody was expecting 2013 to be a very positive year and I guess that is already being reflected in share prices, coupled with liquidity and what has happened in the US, that is what driving the market higher right now," she told ANC.

However, Lee-Tan said one of the triggers for a possible correction could be the looming fight over the debt ceiling in the US.

"We're using technical indicators to help us identify the support levels, which is probably around the 5,700 level. As far as developments are concerned, one of the triggers for a possible correction could be the debt ceiling -- that it will not be resolved at the last minute or if ever it will be," she said.

"If you think of the Philippines, since the market has gone up significantly nothing has changed as far as economy is concerned. I hope we will see more surprises in the economy, so we can have some real drivers for the market going up, not only liquidity."

Last year, the PSEi was one of the best-performing stock markets in the world. The bourse hit 38 record highs in 2012. - With report from Warren de Guzman, ANC

Sam Miguel
01-08-2013, 09:25 AM
Philippine stocks seen to consolidate

Philippine Daily Inquirer

11:06 pm | Sunday, January 6th, 2013

After staging a strong curtain-raiser for 2013, the main-share Philippine Stock Exchange index is seen to challenge the 6,000-mark even though it is expected to enter a consolidation phase.

In the first trading days of the year, the PSEi broke record levels for three straight sessions and gained 2.66 percent, closing last week at an all-time high of 5,971.45.

Global markets were upbeat over a budget deal that enabled the United States to steer clear of a “fiscal cliff,” brought on by a series of tax increases and budget cuts.

Ramon Garcia of RTG & CO. said the market’s move last week, confirmed his projection that the index would break 6,000 in January.

“This will happen this week. I am confident too (that) volume will continue to surge and reach new heights,” Garcia said.

Erico Claudio of Pentacapital Investments suggested that breaching the 6,000 level was a foregone conclusion. However, he said, indicators pointed to a consolidation, or a sideways movement this week. This means the PSEi may move by more or less 1.5 percent.

“I don’t think there’s a major correction yet. But there are many factors preventing another massive or 3-5 percent rise,” Claudio said.

For instance, Claudio said, Wall Street is seeing some correction after digesting the recent US budget deal.

“The celebratory impact will diminish, which means it will either push index down or make it consolidate,” he explained.

But neither is there any big catalyst for a major correction. “There are no indications yet on earnings results. People usually will have an idea by the second half of the month,” Claudio said.—Doris C. Dumlao

Sam Miguel
01-08-2013, 09:27 AM
PH market: Into the first week of 2013

By Den Somera

Philippine Daily Inquirer

9:58 pm | Monday, January 7th, 2013

Trading resumed last Jan. 2, and like the qualities of the “Water Snake”—the year as designated in the Chinese calendar—the market started cautiously and then picked up, turning into an increasingly active trading day.

The benchmark Philippine Stock Exchange index, or PSEi, advanced 48.26 points, or 0.83 percent, at 5,860.99 on a total value turnover of P4.35 billion and total volume of transaction equivalent to 2.24 billion shares, establishing another record high for the market—the first for the year.

To a large degree, the market’s performance was attributed to the reaction registered by financial markets worldwide over the controversial US “fiscal cliff” problem that received last minute remedial measure from the US Congress. The act supposedly put to a “stop hundreds of billions of dollars in automatic tax increases (in 2013) and spending cuts that risked plunging the world’s biggest economy into recession.”

Trading momentum extended the following day, Thursday, with another lurching advance equivalent to 73.06 points, or 1.25 percent, at 5,934.05—again, a new all-time record.

Curiously, the market’s overall advance for the day was precipitated by the increase of total value turnover to almost double that of the previous day at P7.53 billion on a total volume of transaction equivalent to 2.34 billion shares, just a shade over that of the previous day of 2.24 billion shares. It can only be explained by the fact the market apparently shifted its trading focus into big-ticket or first-line stocks.

Market bears on Wall Street, in the meantime, were not content with the remedial measure devised by the US Congress to avert the “fiscal cliff” that their sentiments weighed in on the second day of trading on Jan. 3. The Dow Jones Industrial Average (DJIA) fell 21.19 points, closing at 13,391.36. The previous day’s trading close was 13,412.55.

Unaffected, our market on Friday proceeded to establish another record high. It advanced further with a net gain of 37.40 points, or 0.63 percent, at 5,971.45.

This happened as total value turnover amounted to what seemed to be the market’s regular trading transaction level of P7.59 billion.

Different story

Market results have a different story to tell, though, when you look at the total volume of transaction of the day. Total volume dropped significantly below the 2.24 to 2.34 billion shares volume of the past two trading days. It fell 30 percent lower at 1.62 billion shares.

Taking a closer look at the transaction results, it appears that as the market continued to chase their usual stock favorites in the property, industrial, services and holding firm sectors, trading interest also heightened in the financial sector. Value turnover in the subsector doubled for the day.

You may observe that stock transactions revolved around companies with businesses programmed by the National Economic Development Authority (Neda) to play substantial roles in the economy’s growth.

Said observation will also lead you to understand why transactions in the mining and oil sector have been low in the first three trading days of the market. As pointed out in my last column, Neda is clearly not relying on the mining industry to play a significant role in the economy’s growth program.

On second thought, like I also said the last time, a disconnection between economic variables and stock market performance oftentimes happen. This is the reason why, even when a certain sector of the economy is hard put, some companies in that sector come out with sterling performance results.

So, even if the mining industry is not obviously included as a major factor in Neda’s economic development program, this will not deter some mining issues to outperform during the year.

If you have been following the news, you don’t even have to sharpen your pencils to identify which of the companies will make it big next year.

Year of the Water Snake

Chinese legends say that the snake is a dragon that fell from the sky. That is why the snake is also called the little dragon.

But unlike the dragon, the snake does not have any limbs or wings. It uses internal energy—through its abdominal muscles—to move. This is why legend further claims that the year of the snake is considered a lot different and peculiar in many ways in influencing lives and events than any of the other animals in the Chinese zodiac.

According to the Chinese lunar calendar, the year of the snake begins on Feb. 10 and ends on Jan. 30, 2014.

Following the 12-animal year and five-element year cycle mechanism of the Chinese lunar calendar, the last year of the water snake was in 1953. Considered water snake babies then were those born “between Feb. 14, 1953 and Feb. 2, 1954.”

The snake is also the sixth of the 12 animals that compose the Chinese zodiac. As chronicled, it was the sixth animal to arrive to bid farewell to Buddha before his departure to heaven.

What are we to expect in the year of the snake? According to one prediction, “it’s going to be slow to many.” But like the snake, according to another prediction, “the year will be tricky but exciting to some.”

As pictured, the year will move forward in the way the snake moves. When its body undulates, it’s not easy to tell which direction the snake is going to take. “It will seem to go in one direction, and then, very unexpectedly, it will veer in completely another direction.”

For this, it is said that 2013 may be difficult to plan for. To overcome this, one must have the ability to decide fast or quickly react like the snake when confronted with a sudden change in situation. As said, “quick maneuvers are going to be needed in order to overcome unexpected obstacles.”

Not having such natural ability, one is admonished to make use of tools or gadgets to reinforce one’s faculties.

As foretold, “delusion and deception in the mind are common in the year of the water snake.” Thus, for this year, it is advised that “it is best to work with others,” following the dictum that two minds working together are better than one.

On a personal note, it is advised that you should “be thrifty, and conscientiously save money. This should be a top concern.” The year of the snake can lead you to spend money more quickly than earn them.

Bottom-line spin

Like our market, Wall Street’s main indices closed higher last Friday. S&P 500’s closing index was described to be “its best level since 2007” on reports that the US economy is gaining and showing clear signs of recovery from recession with the latest employment data as a preponderant supporting proof. The DJIA closed 43.85 points, or 0.33 percent, higher at 13,345.21; the Nasdaq was up 1.09 points, or 0.04 percent; and the S&P 500 rose 7.10 points, or 0.49 percent, to 1,466.47.

I still feel that our market and that of Wall Street are similarly situated. They are not yet on sure footing despite their early gains last week. Both look still soft and indeterminate. Like the snake’s gait, they could head up one moment and head down the next, with their directions still far from clear. In this connection, my trading advice is to have alternatives, be it with your stock picks or trading game for the period. Most importantly, be quick to react.

(The writer is a licensed stockbroker of Eagle Equities Inc. You may reach the Market Rider at marketrider@inquirer.com.ph, densomera@msn.com or at www.kapitaltek.com.)

Sam Miguel
01-08-2013, 09:27 AM
91-day T-bill yield falls to 0.05%

By Ronnel W. Domingo

Philippine Daily Inquirer

9:59 pm | Monday, January 7th, 2013

Interest rates on treasury bills stayed below 1 percent during Monday’s auction, with the yield on the 91-day securities plunging to a new record low of 0.05 percent.

National Treasurer Rosalia de Leon said in an interview that the results were probably due to the excess liquidity in the domestic securities market as well as expectations that inflation would remain low.

Monday’s results were mixed, with the yield on the 182-day bill easing to 0.3 percent while that for the 364-day bill rising to 0.763 percent.

The latest rate for the three-month bill was 14.8 basis points lower than the previous average. For the six-month bill, it was 2.2 basis points lower and for the yearlong bill, it was 15.7 basis points higher.

The result for the benchmark bill was 24 basis points lower than the corresponding 0.29 percent for done deals at the private-run Philippine Dealing and Exchange Corp.

In the secondary market, prevailing rates for the 182-day bill was 27.5 basis points higher at 0.575 percent, and for the 364-day bills, 3.8 basis points lower at 0.725 percent.

The Bureau of the Treasury raised a total of P15.8 billion instead of the planned P15 billion. Investors tendered a total of P62.62 billion, or more than four times the total offering.

De Leon expressed pleasure with the market’s reception of the Treasury’s first auction for the year, particularly as the government has just started implementing a revised schedule of offerings.

Auctions are now held monthly—but with larger offer volumes—for both treasury bills and bonds. Previously, these were held every two weeks.

Asked when the government planned to issue global bonds this year, De Leon said there were no such plans yet. In the past several years, the government has been going to the international commercial market every January.

She said the plan for this year was to source 20 percent of the government’s funding deficit from overseas lenders.

“There is no need to do so at the moment, but that is part of the financing program because we have to maintain our presence in the foreign market,” De Leon added.

De Leon said the Treasury was likely to issue the so-called onshore dollar bonds rather than global bonds. The Treasury late last year issued $500 million worth of these dollar-denominated securities that were meant for domestic buyers.

Sam Miguel
01-10-2013, 09:14 AM
SharePHIL takes the cudgels for minority shareholders

By Francis Ed Lim

Philippine Daily Inquirer

1:16 am | Thursday, January 10th, 2013

About three weeks ago, I asked: Who will take up the cudgels for the minority shareholders who stand to suffer from higher taxes and administrative burdens imposed by Revenue Regulation No. 16-2012 (“RR 16-12”)?

Minority shareholders holding at least P72 billion worth of shares are affected by the issuance of RR 16-12. Two weeks ago, my question (and perhaps, the investing public’s prayers) had been answered.

In a letter addressed to the Commissioner of Internal Revenue, Secretary of Finance and the Securities and Exchange Commission, the Shareholders’ Association of the Philippines (SharePHIL) raised its concerns on the deleterious effects of RR 16-12 on the rights of minority shareholders.

SharePHIL is a group that protects shareholders’ rights. Its vision is to be the leading institution and catalyst in the protection and promotion of shareholder rights, duties and responsibilities. Its mission is to be a major player in promoting domestic capital market development through advocacy, education and enlightenment of shareholders.

In 2011, the SEC directed the Philippine Stock Exchange to amend its MPO rule by shortening the deadline for all listed companies to comply with the MPO requirement by 31 Dec. 2012. Companies that fail to meet the deadline would automatically be subjected to a six-month trading suspension, and delisting if they are still noncompliant after six months.

The Amended MPO Rule empowers the SEC to grant, upon the recommendation of the PSE, extensions in justifiable causes where the listed company has a concrete program to restore its public ownership level to the required percentage.

Accordingly, several listed companies applied for extension to comply with the Amended MPO Rule.

The extension would have enabled investors to continue enjoying the preferential tax rate of ½ of 1 percent of the transaction value and the simplified procedure under the law when they sell their shares through the PSE.

Last December, however, the Finance secretary and the Revenue commissioner released RR 16-12 imposing (net) capital gains tax (5 percent/10 percent) and documentary stamp taxes (DST) on the trading of shares of stock of noncompliant companies after the 2012 deadline, regardless of any extension given by the SEC.

As a consequence, the SEC denied all requests for extension of the grace period (Blanket Denial) to comply with the MPO requirement, regardless of their individual merit. Furthermore, the SEC directed the PSE to suspend all noncompliant companies starting 1 Jan. 2013, and automatically delist noncompliant companies after the suspension period.

SharePHIL requested the Finance chief and Revenue commissioner to reconsider RR 16-12, and suspend its implementation. SharePHIL also requested the SEC to reconsider the Blanket Denial based on the individual merit of the applications of noncompliant firms.

Basically, SharePHIL is saying that RR 16-12 is a squeeze-out mechanism that will work against minority shareholders in utter disregard of their rights under the law.

First, the implementation of RR 16-12 vis-à-vis the SEC Blanket Denial will reduce liquidity in the secondary market because of the higher transaction costs and greater administrative burden on minority shareholders who wish to sell their stakes in affected firms. Minority shareholders will now have to pay the (net) capital gains tax (5 percent/10 percent) and DST instead of the ½ of 1 percent stock transaction tax mandated by law. They will now also have to file several returns and additional documentary requirements with the Bureau of Internal Revenue for each transaction.

SharePHIL notes that minority shareholders do not have the same economies of scale as do larger shareholders, to reduce the costs associated with a transaction on a per share or peso basis. The additional costs and burdens imposed on the transfer of shares, as well as the automatic suspension or delisting of publicly listed companies, will further reduce liquidity in the secondary market.

SharePHIL further explained that delisting companies from the PSE will result in a lower disclosure regime that will adversely affect good corporate governance because of the lack of market check and reduced price transparency and accuracy.

Second, SharePHIL argued that the tender offer (which is a PSE requirement for delisting a noncompliant company) will not necessarily serve the best interest of minority shareholders. Unlike the mandatory tender offer required by the Securities Regulation Code, where a significant block of shares (35 percent or more) is being acquired, or where the resulting interest of the acquiring shareholder is majority ownership of the target company, there is no control or significant shareholding premium involved when the person(s) required to make the tender offer are already the controlling shareholders of the company.

What this all means is that minority shareholders will not be able to obtain the true value of their shareholdings as they are made to choose between (1) an offer that does not offer any premium and may be well below the true worth of the listed company, and (2) higher tax and administrative burdens and increased transaction costs. Either way, the minority shareholders hold the proverbial “empty bag.”

Third, SharePHIL asserts that the Tax Code only requires that shares of stock be listed and traded in the local stock exchange subject to the stock transaction tax of ½ of 1 percent in lieu of (net) capital gains tax and regular corporate or individual income tax, and exempt from DST.

RR 16-12 constitutes an illegal change of rules in the middle of the game that would erode the confidence of the investing public in our market.

Based on PSE’s final report, there are 10 noncompliant companies that account for about P722.3 billion in market capitalization, or 7.67 percent of the total domestic market capitalization of our stock market. If delisted from the PSE, the market capitalization of our stock market will be greatly reduced, which will make it less attractive to investors and adversely impact on local share prices to the detriment of the innocent small Juans and Marias.

With SharePhil leading the way, minority shareholders may just have found a voice to champion their cause.

(The author is co-managing partner and head of the corporate and special projects department of ACCRALAW, and a law professor at the Ateneo Law School. He may be contacted at felim@accralaw.com.)

Sam Miguel
01-10-2013, 09:24 AM
Is the PH stock market going to crash soon?

By Henry Ong

Philippine Daily Inquirer

1:30 am | Thursday, January 10th, 2013

Question: Many are optimistic that the stock market will continue to be bullish this year with the index likely to reach an all-time high of 6,500. While this is definitely good news, I am beginning to feel uncomfortable as share prices are already very high. I am not sure if I should buy more or start selling at the current level. Can you advise me?—Gigi F. by e-mail

Answer: If you want to take advantage of the current bullish momentum, you can trade for short-term gain by buying one of the most active stocks and sell it immediately as soon it makes a profit.

This is actually fun but it be can be risky. If the stock fails to move up as expected, you may have to sell it at a loss to recover your cash at once. If you choose to hold on to it in the hope that the stock will improve later, you may risk losing more if the stock suddenly takes a sharp fall.

While it is true that the market enjoys strong economic fundamentals and liquidity flows, the potential for further upside at the moment may be limited as stocks have become expensive by Price-to-Earnings (P/E) valuation.

In fact, the Philippine market, which has market P/E of 19x is relatively more expensive than Singapore or Hong Kong, which has market P/E of only about 12x. To justify the current share prices, corporate earnings must demonstrate exceptional earnings growth to bring down P/E valuations.

If you are deciding whether to buy or sell, consider analyzing this from a risk and reward ratio. Let’s assume the market falls from its current level of 6,055, the immediate support would be 5,866, which gives a 3.1-percent loss. If, on the other hand, the market continues its uptrend and the first resistance is 6,130, you will get 1.2 percent return.

If the probability is high that the market will stop at 6,130, it may not be a good idea to buy at this point because you will risk more in order to gain. It will be wise to start taking profits on some stocks, especially those that have become expensive and invest the cash proceeds to cheaper stocks or simply keep it at the bank until another opportunity arises.

If the prospect of further upside is limited, does this mean that the market may crash soon?

Not necessarily. It only means that the current uptrend may be reaching its terminal phase because share prices are trading well above their underlying values caused by market traders who are bidding shares based on overly optimistic earnings assumptions.

The index must eventually correct itself by falling to levels acceptable to the market. It can fall by as much as 10 percent over a period of time. Corrections are inevitable. What goes up must come down.

In a bull market scenario, any price dip is considered temporary because you expect the stock to recover again. In fact, it is during this time when you take the opportunity to buy back stocks at a lower price for another market run-up. However, if the trend has reversed, any share price rally will be minimal and the selling will continue and possibly accelerate the market downwards.

Do you know that a bull market lasts for three to four years? Our current bull run actually started last March 2009 and it will be celebrating its 4th anniversary this March 2013. Could the end of the bull market be near?

No one knows when this will happen but there are signs that the market is ripe for massive correction. Do you see more of your friends now talking about stock market than in the previous years? Do you see people discussing about stocks more than usual at Facebook, Twitter or online forums? Do you hear radio and TV shows discussing about opportunities in stock market more often than before? Are newspapers featuring stock market news or stories on the front page? Are brokers and fund managers making bold forecast that the index may reach 7,000 level this year?

As more people talk about making money from stocks, more people will get into the market hoping that they will also make a fortune. As buying of stocks increases, people will be chasing stocks and drive share prices above their intrinsic values. Market psychology will tell you that this could be a sign that the party will be over soon.

This is the best time for you to assess your portfolio and evaluate your positions. You may have to reallocate some of your stock investments into other assets for the moment as you wait for the market to correct.

Yes, you will probably feel some regrets as you say goodbye to your favorite stocks for now especially if you see the stock continue rising after you have sold it. There is no way you can catch the market top and maximize your profit. Start selling gradually. Sell while it feels good.

Do not wait for the market to fall before you start selling. You may not be able to sell it at the price you want because you will be rushing to sell down for fear that the share prices may go lower.

Just like the perfect punch that knocked out the “Pacman,” it only takes a single bad news to knock this market down so be careful and watchful.

Henry Ong is a registered financial planner of RFP Philippines. To learn more about financial planning and how to become RFP, attend our free personal finance talk on Jan. 17, 7 p.m., at PSE Center, Ortigas. To reserve, e-mail info@rfp.ph or visit www.rfp.ph.

Sam Miguel
01-10-2013, 09:28 AM
PSE moves to widen stock market participation

By Doris C. Dumlao

Philippine Daily Inquirer

12:44 am | Friday, December 7th, 2012

The Philippine Stock Exchange sees exchange-traded funds (ETFs) coming into play in the bourse by the first quarter of 2013, diversifying investment options in a low-interest rate environment.

PSE president Hans Sicat, speaking at the final plenary session of a two-day Citi-FT Financial Education Summit 2012, said the introduction of new products was part of the exchange’s attempt to widen investor participation in the stock market.

Sicat talked about the PSE’s market education efforts targeting people with at least P100,000 in savings.

At present, he estimated that about 39 percent of people with savings kept their money in banks, while another 39 percent kept them at home.

Sicat stressed the need for the PSE to reach out to the populace. Even as the market is hitting all-time highs, he said the common perception was that stock investing was only for the wealthy and that it was a form of gambling.

The Securities and Exchange Commission recently approved the regulatory framework for the offering of ETF, a financial instrument that tracks an index, a commodity or a basket of assets like an index fund. Since it trades like a stock on an exchange, its net asset value (NAV) is not calculated every day but it usually trades close to its NAV.

Sicat said these instruments could be introduced by the first quarter of next year, along with other products like securities borrowing and lending.

An ETF offers public investors an undivided interest in a pool of securities and other assets. It is similar in many ways to traditional mutual funds, except that shares in an ETF can be bought and sold throughout the day like stocks on an exchange through a broker or dealer.

More than 130 financial education experts and policy-makers around the world convened in town in the last two days to discuss financial capability as a 21st century life skill at the Citi-FT Summit, putting emphasis on the need to reach out to under-served segments such as the youth, migrant workers, women “at risk” or those abused or exploited, and people in rural areas.

Commenting on the summit, Citi Foundation chief operating officer Brandee McHale said this was “an important forum highlighting the critical need to improve consumer financial capabilities across age and income segments.”

Brandee added: “Financial capability is not a standalone issue, but linked to a broader financial inclusion dialogue. The Summit provides an opportunity to roll up our sleeves and examine what works and why.”

Over the last two days, the summit served as a venue for public and private sector representatives as well as non-government organizations from all over the world to share best practices, key insights and recommendations to address financial education needs.

Sam Miguel
01-10-2013, 09:50 AM
Index stretches run to 6th day this year

By Neil Jerome C. Morales

(The Philippine Star) | Updated January 10, 2013 - 12:00am

MANILA, Philippines - For the seventh consecutive trading day, the main stock index rewrote records anew, hitting a fresh all-time high yesterday as investors remained bullish on Philippine economic and business prospects.

The benchmark Philippine Stock Exchange index (PSEi) finished at a new record high of 6,091.18, up 42.28 points or 0.7 percent from Tuesday’s close.

Since last year, the PSEi has registered record highs a total of 44 times.

The broader All Shares index gained 0.57 percent or 21.64 points to 3,835.29 as all counters supported the uptick, led by mining and oil firms and property companies.

Market breadth was positive, as advancers beat decliners, 109 to 73, while 32 stocks remained unchanged. Value of shares traded increased to P8.54 billion from P7.47 billion a day ago.

“The bull run continues. It is being powered by market liquidity and economic prospects for the year,” Astro C. del Castillo, managing director of First Grade Finance Inc., said in a phone interview.

The local market, along with other Asian bourses, bucked the downtrend in the US, where investors worried over lackluster corporate earnings growth in the fourth quarter.

Amid the overbought levels of the market, Del Castillo said “there seems to be a room for more run.”

“It seems the bulls are hungry for the 6,100 mark,” he said.

Around Asia, stocks rose yesterday after the fourth-quarter earnings season got off to a positive start in the US with aluminum giant Alcoa forecasting higher demand for 2013.

Sam Miguel
01-10-2013, 10:09 AM
BOI prepares for investment conference, road shows

By Louella D. Desiderio

(The Philippine Star) | Updated January 10, 2013 - 12:00am

MANILA, Philippines - The Board of Investments (BOI) is completing preparations for its investment conference InvestMart, and road shows on business opportunities in the country’s different regions this year as it seeks to encourage local investments.

Trade undersecretary Cristino Panlilio said the InvestMart and road shows are part of the government’s efforts to increase domestic investments, even as it is works to attract foreign firms to do business here.

“To complement our strengthened effort to attract foreign investors in the Philippines, we will continue to make parallel efforts to boost domestic investments in the country in 2013,” he said.

Panlilio said preparations for the InvestMart conference and exhibition, which aims to present investment opportunities in the regions would be completed.

He said the government plans to hold the InvestMart with a leading industry association.

“We have also worked with industry players and associations in identifying potential investment areas and sectors for promotion such as the public private partnership (projects), pharmaceuticals, electronics, copper, and auto parts and components,” he said.

He said the BOI is likewise looking to hold more investment road shows this year.

“For this year, we are also targeting 11 investment road shows, which are primarily intended to provide a venue for presentation of the approved Investment Priorities Plan (IPP),” he said.

Last year, the BOI had nine investment road shows.

The road shows were held in Dipolog, Butuan, Baguio City, Davao City, Cagayan de Oro City, Naga City, Tacloban, Cebu and Bacolod.

The IPP identifies activities that can enjoy incentives from the government.

Under the 2012 IPP, the following are listed as preferred activities: agriculture, agribusiness and fishery; creative industries or knowledge-based services; shipbuilding; mass housing; energy; infrastructure; research and development; green projects; motor vehicles; strategic projects; disaster prevention, mitigation and recovery projects; iron and steel; and hospital or medical services.

Sam Miguel
01-11-2013, 08:57 AM
SEC softens stance on shares ownership rule

By Doris C. Dumlao

Philippine Daily Inquirer

11:24 pm | Thursday, January 10th, 2013

The Securities and Exchange Commission is no longer keen on imposing a 60-40 percent local-foreign ownership restriction on each class of shares, as originally intended by the controversial Supreme Court ruling on the capital of Philippine Long Distance Telephone Co.

In a briefing on Thursday, SEC chairperson Teresita Herbosa cited an “entry of judgment” received by the SEC from the Supreme Court on Jan. 9. This clarified that the “dispositive” portion of the SEC decision dated June 28 was that the term “capital” as referred to in the Constitution “refers only to shares of stock entitled to vote in the election of directors, and thus in the present case, only to common shares and not to the total outstanding capital stock (common and non-voting preferred shares).”

As such, Herbosa said: “Maybe we won’t go to the strict rule of requiring 60 percent (local ownership) in each class of shares.”

“We will try to come up with rules that will lessen conflict and controversy (that are) acceptable to all, but we also see the need for foreign capital to come in,” Herbosa said.

When the draft guidelines on foreign ownership were drafted, Herbosa said this adopted the most restrictive framework.

The Supreme Court’s entry of judgment was favorable to the claim of PLDT lawyers that the dispositive portion was not modified in the Oct. 9, 2012, decision on the motion for reconsideration.

This suggests that the Supreme Court has accepted that the statements pertaining to classes of shares were in the nature of obitur dictum and do not represent a legal precedent, and that the SEC is not legally compelled to follow it.

Joescoundrel
01-12-2013, 12:10 PM
Stocks resume rally

Philippine Daily Inquirer

11:38 pm | Friday, January 11th, 2013

Local stocks resumed their upswing Friday as investors cheered the Securities and Exchange Commission’s softer stance on foreign ownership and improved outlook on the global economy.

The main-share Philippine Stock Exchange index rose 33.18 points or 0.55 percent to finish at 6,051.75.

“The mere signal of a direction toward imposing the foreign ownership restriction to common or voting shares appears to have been well-received by the market. It seems to also have had an immediate impact of supporting the upward movement of the market. We are hopeful that the government can issue rules or guidelines pertaining to foreign ownership that will not be deemed disruptive to investor behavior while remaining faithful to the ruling issued by the Supreme Court in this matter,” PSE president Hans Sicat said.

The SEC has indicated that it might adopt more market-friendly rules than the draft issued for comments last year.

The counters that benefited the most were mining/oil (+2.13 percent) and services (+1.46 percent). Only the property counter (-1.13 percent) ended in the red. Value turnover was heavy at P9.43 billion. There were 116 advancers that edged out 52 decliners while 42 stocks were unchanged.

“The market volume of P9.4 billion can be attributed to strong foreign buying. We may look forward to overall new highs,” said Ramon Garcia, president of brokerage RTG & Co.

Index heavyweight PLDT surged 1.97 percent on news that the SEC was no longer keen on imposing a 60-40 percent local-foreign ownership requirement on each class of shares in partly nationalized industries like utilities. Doris C. Dumlao

Sam Miguel
01-14-2013, 10:49 AM
6000

PHILEQUITY CORNER

By Valentino Sy

(The Philippine Star) | Updated January 14, 2013 - 12:00am

When the PSE Index breached the 5,000 level in March last year (5000, March 5, 2012), President Aquino visited the PSE and rang the opening bell to celebrate this milestone. Our president was so optimistic about our economy and our stock market performance that he challenged brokers to reach the 6,000 level for the PSE Index. PSE chairman Titoy Pardo, who also made a speech that day, replied, “The difficult takes a while, the impossible a bit longer.”

After reaching 5,000, the PSE Index traversed 1,000 points and reached another milestone – the 6,000 level – in just 10 months. Many say that the PSE Index will probably slow down in 2013 as valuations start to look expensive after a record-setting performance in 2012. However, the performance of the PSE Index for the first two weeks of the year shows that it is poised to deliver another strong showing for 2013.

More fun at 6000

The 6,000 level was first reached when the PSE Index closed at its intraday high of 6,044.91 last Monday, Jan. 7, 2013. When 6,000 was reached, traders at the exchange were seen flashing placards saying “More Fun at 6000.” They also gleefully gestured “7” with their fingers, clearly referring to 7,000, which is the next round number milestone for the PSE Index. With the PSE Index breaching milestone after milestone, those who participated in our stock market would really think that stock investing is more fun in the Philippines (Stock Investing: It’s more fun in the Philippines, January 16, 2012).

2012 Scorecard: Philippines, a top performer

2013: Philippines – leading the pack

Starting Dec.r 28, 2012, the PSE Index had been up seven straight days before it experienced a decline. Moreover, the index was up in seven out of the first eight days of 2013. Net foreign buying has continued to be strong and has already amounted to P18.5 billion for the first two weeks of 2013. As a result, the PSE Index is once again the top performing stock market in the early part of 2013.

Proving the skeptics wrong

Many foreign houses have repeatedly recommended an underweight on the Philippine stock market for the last 3 years, citing the historically high valuation for Philippine stocks. What they have repeatedly underestimated is the certainty, quality and strength of the earnings growth of Philippine corporates. The continued strong performance of the PSE Index since the start of this bull market has proven these skeptics wrong.

How to join the bull party

Most of our readers and clients, especially those with little or no exposure to Philippine stocks, have been asking when or how to best enter our stock market. Some of them are worried that the current levels might be too high as our stock market has repeatedly established new all-time highs. Though buying on dips will likely be more profitable, we believe that corrections, especially short-term ones, are extremely hard to predict. Since there are many factors that precipitate corrections, it is difficult to gauge exactly when they will happen. Moreover, it is difficult to predict how long or how deep corrections will be. Even professional traders and experienced investors often make mistakes in predicting the exact duration or magnitude of corrections.

Peso cost averaging

In a bull run such as what we are witnessing now, it is better for prospective investors or those with little exposure to the stock market to just get in gradually. We would advise investors who cannot monitor the stock market on a daily basis to use peso cost averaging to gradually increase their exposure to Philippine stocks. Peso cost averaging refers to a technique which entails buying a fixed peso amount of investments on a regular schedule, regardless of prices. It can mean buying once a week, once every two weeks or once a month. This technique allows investors to buy more shares when prices are lower and less shares when prices are higher.

Investors applying this kind of buying technique should not be interrupted or shaken out by corrections. Since there are concerns about our stock market’s current valuation, corrections will give investors a chance to increase their exposure to Philippine stocks at cheaper levels. We think that corrections will always be there as they are part and parcel of a bull market. Despite their repeated occurrence, we believe that corrections will not change the fundamentals and the growth story of this bull market.

Central Banker of the Year for Asia Pacific

Recently, Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. was named Central Banker of the Year for Asia Pacific for 2012 by The Banker. Incidentally, he was also named Central Bank Governor of the Year for Asia for 2012 by Emerging Markets, an affiliate of Euromoney. BSP’s policies have immensely contributed in insulating our economy from various global macroeconomic headwinds and tempering the peso’s appreciation despite strong foreign fund inflows (Is the peso too strong?, Dec. 31, 2012).

Finance Minister of the Year

Similarly, Department of Finance (DOF) Secretary Cesar Purisima was named Finance Minister of 2012 by Euromoney. DOF’s actions have strongly contributed to the country’s solid fiscal performance. This gives the government enough fiscal leeway to actively pursue investments in infrastructure, which we believe are essential in propelling our country to the next level of economic growth.

Structural changes and sustained growth

Under the leadership of President Aquino, his Cabinet and government leaders such as Purisima and Tetangco, the Philippines is clearly in a better position than its bigger or more developed counterparts. Many developed countries, such as the US and those in Europe, are grappling with ballooning fiscal deficits, persistent sovereign debt problems and slow economic growth. Through the years, our country has undergone a series of structural changes that will enable it to deliver sustained economic growth. Now that the country has shown that it can deliver high GDP growth, we share the sentiment of various credit rating agencies and some enlightened government officials that the focus will now be on sustaining GDP growth at the five to seven percent level. This will not only lead to more inclusive economic growth but it will also be a crucial underpinning of a sustained bull market in Philippine stocks and Philippine assets. We will discuss in our next articles the structural changes that caused this secular bull market and the reasons why investing in the Philippine stock market will continue to be profitable.

For further stock market research and to view our previous articles, please visit our online trading platform at www.wealthsec.com or call 634-5038. Our archived articles can also be viewed at www.philequity.net.

Sam Miguel
01-14-2013, 11:06 AM
Stock seen to trade in tight range this week

By Neil Jerome C. Morales

(The Philippine Star) | Updated January 14, 2013 - 12:00am

MANILA, Philippines - Share prices are expected to trade at a tight range this week with investors repositioning extra cash during declines.

Positive leads will likely come in the local front through corporate and government spending, an analyst said.

“For now, range-trading might be felt following the Philippine Stock Exchange index’s uptrend since December last year,” said Freya Natividad, investment analyst at brokerage firm 2Trade-Asia.com.

“Most boost would come from expectations of aggressive government and corporate spending in the first half,” Natividad said.

Week-on-week, the PSEi, the gauge of the local stock market’s performance, jumped 1.34 percent or 80 points to close at 6,051 driven by hefty gains in mining and oil firms (up 5.36 percent) and industrial companies (up 1.78 percent).

Last week, the bellwether PSEi pierced the 6,000 mark, closing at a new all-time high of 6,091.18 on Wednesday before pulling back on Thursday due to bright outlook on economic growth this year.

Natividad said declines this week will allow investors to reposition excess cash into the stock market.

“Start selecting stocks that have lagged versus market counterparts, especially those that would benefit most from improved fiscal and corporate spending focus this year,” Natividad said.

Overseas, investors might focus on economic numbers in the US particularly on inflation and the jobs market.

In Asia, attention will be in China, specifically on the country’s ability to recover from consumer demand slowdown, Natividad said.

2Trade-Asia.com pegged immediate support level at 6,000 and resistance mark at 6,100-6,150.

Sam Miguel
01-14-2013, 11:29 AM
Philippine stocks seen to rise

Philippine Daily Inquirer

3:28 am | Monday, January 14th, 2013

Local stocks are seen to challenge record highs this week as the overhang from the foreign ownership restriction issue has been lifted.

Last week, the main-share Philippine Stock Exchange index gained 1.33 percent to close at 6,051.75.

The PSEi’s best finish was so far at 6,091.18 recorded on Jan. 9 this year while the intraday peak was at 6,098.14 posted the following day.

BPI Securities said that for this week, the PSEi would be inclined “to breach its new record high as foreign inflows are expected to enter into the picture, boosted by foreign ownership issue relaxation as well as a likelihood of an upgrade in rating this year.”

The SEC indicated last week that it was no longer keen on imposing a 60-40 percent local-foreign ownership restriction on each class of shares as originally intended arising from a controversial Supreme Court ruling on the capital of Philippine Long Distance Telephone Co. Citing an “entry of judgment” received by the SEC from the Supreme Court on Jan. 9, SEC chairperson Teresita Herbosa said it was clarified that the “dispositive” portion of the SEC decision dated June 28 was that the term “capital” as referred to in the Constitution “refers only to shares of stock entitled to vote in the election of directors, and thus in the present case, only to common shares and not to the total outstanding capital stock (common and non-voting preferred shares).”—Doris C. Dumlao

Sam Miguel
01-14-2013, 11:31 AM
Local stock index seen hitting 7,100 this year

Macquarie Capital bullish on banks, property

By Doris C. Dumlao

Philippine Daily Inquirer

3:23 am | Monday, January 14th, 2013

The local stock index may surge further to 7,100 by the second half of this year but should consolidate in the near term given that most key stocks are at all-time highs and vulnerable to profit-taking, according to Macquarie Capital Securities (Philippines) Inc.

In a Jan. 7 equities research written by Macquarie analysts Alex Pomento, RJ Aguirre and Aaron Salvador, it was projected that the stock market rally should be sustained as economic and corporate earnings growth remained strong.

Macquarie is expecting the domestic economy to expand by 6 percent this year, on pace with last year’s growth, underpinned by rising investments, consistent inflow of remittances from Filipinos abroad and the growing business process outsourcing (BPO) industry. It estimates that investments would grow by 12 percent this year, continuing the “decent” growth in the first nine months of 2012.

Macquarie is projecting remittances to grow by 5 percent this year to $22.5 billion while BPOs are seen generating revenues of almost $14 billion, or 20 percent higher year on year.

But with the stock market now up by as much as 42 percent (US dollar terms) in the past 12 months, Macquarie said it was “ripe for investors to take money off the market at this stage until we see new catalysts that could propel the market to new highs.”

At its Philippine Stock Exchange index (PSEi) target of 7,100, this would translate to a valuation of 21x the expected 2013 earnings, falling to 17.7x the likely earnings for 2014—at the upper end of the trading range of the market in the past five years.

“Our optimism is based on the potential upside surprise in the earnings outlook—in our view, the market is factoring in low earnings expectations at only 10 percent, which we believe makes current valuations look artificially high—and our expectation that the peso-dollar (exchange rate) should appreciate by 5 percent to P39 by yearend, providing additional gains for foreign investors that enter at this level of the market,” the report said.

Moreover, Macquarie said Philippine corporate balance sheets remained healthy, with a gearing (debt-to-equity ratio) of only 41 percent in 2012 with a return on equity of 16 percent.

“In addition, we believe the upcoming midterm elections should provide additional boost to the overall income of sectors that are highly linked to elections like consumer companies, retailers, fast-food chain, telecoms and media,” the report said.

When earnings upgrades are factored in on its PSEi target, the report said this would translate to 13x the expected earnings for 2014—at the lower end of the price to earnings range of 10x to 18x over the past 10 years.

The stocks favored by Macquarie based on potential upside to its target prices are Banco de Oro, Metropolitan Bank and Trust Co., Security Bank, Rizal Commercial Banking Corp. and SM Development Corp.

Macquarie said BDO would continue to be the leader in loan growth, with an estimated annual growth of 15 percent over the next three years.

In the case of Metrobank, the research said that among the top three banks in the country, it was in the best position to capture loan growth given its loan-to-deposit ratio of 68 percent. Also cited was Metrobank’s improving return-on-equity profile, which it estimated to grow from 10 percent to 13 percent in the next four years.

For Security Bank, Macquarie said the bank was transforming itself into a more traditional bank, with management now more committed to growing its lending business. Despite strong competition and depressing margins, the bank is seen maintaining net interest margins to at least 3.8 percent, driven by low-cost deposits.

Meanwhile, the report said RCBC was “the most undervalued, under-owned bank with stable margins and earnings outlook.” It said the bank was ready to compete after beefing up capital and maintaining a strong balance sheet that allowed its expansion.

Sam Miguel
01-14-2013, 11:33 AM
Biz Buzz: Sticky middle ground

By the staff

3:26 am | Monday, January 14th, 2013 On the reported “compromise” that’s shaping up between two proponents of separate connector roads linking the North and South Luzon expressways, the government seems to be getting impatient waiting for rivals San Miguel/Citra and Metro Pacific groups to resolve their differences on the P7-billion, five-kilometer common alignment on their own. After all, the government wants the project to get going in preparation for the Asia-Pacific Economic Cooperation (Apec) Summit to be hosted by the Philippines in 2015.

What compromise is likely? As part of the middle ground, both parties have so far agreed to adopt an “open system” for toll plazas instead of the more complicated inter-operability similar to the flat rate system now used in NLEx. This means that San Miguel and Metro Pacific will both put up their own toll plazas (and take forever in reconciling and linking their systems). The agreement is to let the motorist pay a flat rate for the common segment in whichever toll plaza he chooses to exit plus the balance for the distance of travel.

But what remains a sticky issue is how soon Metro Pacific will contribute to the common segment. Our sources say that Metro Pacific wants to contribute to the cost upfront while San Miguel/Citra wants Metro Pacific’s participation back-ended specially since the former’s connector road is still expected to undergo a Swiss challenge and is therefore expected to start at a later date than San Miguel/Citra’s project (whose concession naturally ends at Buendia and therefore can begin expeditiously from that end moving to the north).

The San Miguel group’s proposal is for it to undertake the construction of the common segment and let Metro Pacific pay for its 50-percent share once the latter’s alignment is completed, say in three years. As a sweetener, our sources say San Miguel has offered a settling of the differential if the vehicular traffic assumptions are not met by the time the tollroads are operational. For instance, if Metro Pacific gets only 30 percent of traffic flow, then 20 percent of the cost of the common segment will be given to them and vice versa.

The ball is now in Malacañang’s court on how to find the best middle ground.—Doris C. Dumlao

Islamic bonds

The Securities and Exchange Commission is working with the Asian Development Bank to come up with a new framework for the registration of Islamic bonds, or those that conform with the Sharia law (which, as we all know, prohibits the charging of interest). SEC officials see the introduction of Islamic bonds to the local market as timely especially with the Bangsamoro peace accord, which is seen boosting more interest to do business in Mindanao.—Doris C. Dumlao

PLDT vs SMIC

They looked like they took it in stride, but we hear that the brass at PLDT were not too happy about losing the title of “largest Philippine company” to SM Investments Corp.

With that came the unofficial title of stock market “bellwether,” which refers to a listed company that best represents the Philippine economy. For a few days, that went to SMIC after its shares surged along with local prices, as PLDT’s stayed put (due in part to lingering questions about foreign ownership limits being deliberated by regulators).

By Tuesday of last week, PLDT group officials rejoiced when the telco overtook SMIC’s market capitalization by a hair’s breadth. But their joy was short-lived as the Henry Sy-owned firm surged ahead the very next day.

Thankfully for PLDT, the Securities and Exchange Commission hinted last Friday that it would opt for a more liberal interpretation of the constitutional limit on foreign ownership of shares. This caused an almost 2-percent increase in PLDT’s share price to P2,688, raising its market cap to P580.76 billion… slightly higher than SMIC’s P573.14 billion.

So PLDT is back on top. For now.—Daxim L. Lucas

Love your own

In a recent restaurant industry “secret” awards, not a few chefs and industry insiders were left with their mouths agape upon the announcement of the winner of one particular category. For the second time since the awards were established, a tired, old restaurant in Greenbelt became the recipient of the “best Japanese restaurant” award.

What has kept tongues wagging among our sources is that this restaurant is owned by the family of the main proponent of the restaurant industry awards. A case of incest, perhaps? Or a lack of delicadeza (a trait that should actually be familiar to the restaurant owner in question being of the Spanish persuasion). It’s a bit like Robert Redford receiving an award for his own film entry in the Sundance Film Festival, except that the brilliant actor and director wouldn’t even dare participate in that competition that he established.

Adding to the incredulity of the award category, fans of Japanese cuisine note that in terms of the freshness in sashimi alone, the category winner is definitely no match for its well-known neighbor along Pasay Road, which continues to attract a large number of patrons despite its pricier menu. (We wonder though why this particular restaurant wasn’t included among the nominees this year.) Anyway, it just shows that diners with sophisticated palates know real food quality when they taste it. Awards can’t swing good taste.

As for the rest of the awards, there must be something to be said about the tight-knit group that runs and participates in the awards. Gourmands note that a number of the category winners were definite head scratchers.–Daxim L. Lucas

McDreamy loves Tully’s

So actor Patrick Dempsey—nicknamed “McDreamy” in the TV show “Grey’s Anatomy”—trumped the likes of Starbucks Corp. for the Seattle franchise Tully’s Coffee at a bankruptcy auction. Recently, he tweeted “We got it! Thank you Seattle!” and later commented in media reports about wanting to save the company and the jobs it has created.

Of course, there’s nothing preventing customers from thinking “McDreamy loves Tully’s.” Yet local officials say there is no direct impact since the Tully’s Coffee franchise in the Philippines operates under a separate company and has its own roll-out plan.

The Big Chill Inc. (TBC), a subsidiary of farm-to-plate agribusiness firm AgriNurture Inc., opened an outlet in Araneta Center last December and said it would be opening outlets in Magnolia, Binondo and Subic soon. The flagship store is in Bonifacio Global City.

“Generally, expansion plans of Big Chill in the Philippines will not be affected,” TBC president and CEO Dan Francisco said in a text message. “Though we won’t mind working with Patrick Dempsey one day.”—Riza T. Olchondra

Sam Miguel
01-15-2013, 10:05 AM
Perils of public office

Philippine Daily Inquirer

8:57 pm | Monday, January 14th, 2013

The filing of criminal complaints last week against ranking officials of the Bangko Sentral ng Pilipinas and the Anti-Money Laundering Council again illustrates the risks that public officials face. It’s not that all those in government are scrupulous. It’s just that complaints against public officials are not that common and many are intended to harass the accused.

Businessman Roberto Ongpin has haled BSP Deputy Governor Nestor Espenilla Jr. to court for allegedly violating the Antigraft Law. In a complaint filed at the Office of the Ombudsman, Ferdinand Marcos’ trade minister assailed Espenilla for signing the AMLC resolution in September 2012 that sought a freeze order on his bank accounts. The Court of Appeals’ freeze in December of some 100 bank accounts linked to Ongpin caused the value of the shares in his companies to plunge. His lawyer claimed that nearly P9 billion in the market value of his shareholdings in Philweb Corp., Alphaland Corp., Atok-Big Wedge Co. Inc. and Philippine Bank of Communications had been wiped out. The complaint alleged that the freeze order damaged Ongpin’s reputation and ruined a potential $1-billion investment deal.

Ongpin, ranked by Forbes Magazine as the 9th richest Filipino, said Espenilla “acted recklessly and in clear bad faith” when he signed the AMLC resolution. Ongpin’s basis was what he termed Espenilla’s “contradictory” position—the BSP official allegedly cleared the businessman’s transactions with the state-owned Development Bank of the Philippines during the Senate hearings in 2011. “He acknowledged under oath during a Senate probe that from the point of view of the BSP as the regulator of banks, the sale by DBP of its 50 million Philex shares to a company beneficially owned and controlled by Ongpin was a ‘prudent’ and ‘positive’ transaction that resulted in ‘trading gains’ for the bank,” Ongpin said. Yet last November, Espenilla signed the AMLC petition for a freeze on Ongpin’s accounts. This was in connection with inquiries into P660 million in alleged behest-loan deals between Ongpin and DBP officials in 2009, when the businessman was reportedly in the good graces of the Arroyo administration.

The BSP has expressed concern that Ongpin was “singling out” Espenilla; the AMLC resolution was also approved by the heads of the Securities and Exchange Commission and the Insurance Commission who sit as members of the AMLC board. BSP Governor Amando Tetangco Jr. chairs the AMLC, but because he was abroad on official business when Ongpin’s issue was tackled, the freeze order was authorized by Espenilla, the BSP chief’s alternate.

The central bank has also pointed out that the AMLC freeze order was issued after the Court of Appeals found probable cause to act against Ongpin.

The case began as a “word war” between Ongpin and the BSP, after the businessman resigned as director of PBCom when the central bank “deferred” his confirmation. The deferment, in turn, was due to legal questions on Ongpin’s purchase of Philex shares using loan proceeds from DBP. Ongpin has subsequently sold his stake in

PBCom, citing the need to make a “financial sacrifice” and spare the bank from any backlash that could arise from his legal battle with “a ranking central bank official.”

Ongpin has wisely steered clear of waging war with the BSP itself, emphasizing that he had “no rancor whatsoever” against it as an institution. The BSP had earlier described Ongpin’s allegations of partiality as “unwarranted and patently unfair,” saying that the central bank “has the responsibility to ensure that careful evaluation of critical elements is made before final decisions are promulgated.”

The BSP has long pushed for an amendment to its charter to exempt its officials from legal actions while in the course of performing their functions. This followed the numerous court cases filed against BSP executives by owners and officers of shuttered banks or financial institutions in trouble.

The central bank has noted that some of its officials were wasting much time attending court hearings, even in the provinces where some of the cases were filed. Worse, it said, its hands were often tied by restraining orders issued by various courts, prohibiting it from taking action against erring banks and their owners and officers. Perhaps it’s time to take a serious look at the BSP’s plea for immunity from suit.

Sam Miguel
01-15-2013, 10:07 AM
Corporate bonds sale up 34%

By Michelle V. Remo

Philippine Daily Inquirer

11:56 pm | Monday, January 14th, 2013

Funds raised through the sale of corporate bonds in the domestic market surged by 34 percent in the first 10 months last year to P237.4 billion from P176.7 billion in the same period in 2011, data from the Bangko Sentral ng Pilipinas showed.

Monetary officials said the increase in the bonds sold by corporations could indicate an increase in the issuers’ business activities.

“Corporations continued to tap the capital markets for financing,” the BSP said in a report.

According to officials, the Philippines currently enjoys a virtuous cycle, under which the country’s improving economic climate drives positive sentiment among portfolio fund owners while higher investments in peso-denominated securities help firms fund more activities that support a faster economic growth.

According to the BSP, the growth in corporate bond issuances came with the rise in sale of equities. This is a welcome development, according to the central bank, which said funds are becoming easier to access.

Citing data from the Philippine Stock Exchange, the BSP said funds raised from sale of publicly listed stocks had hit P192.9 billion in January to October last year, more than double the amount posted in the same period in 2011.

Officials said the sale of more corporate bonds and equities in the country indicated that companies were no longer relying solely on banks for their funding requirements.

They noted, however, that banks continued to service the funding needs of corporate clients. The double-digit rise in loan portfolio of banks in the country reflected the growing resources of banks and their appetite for lending.

Latest lending data from the BSP showed that loans extended by universal and commercial banks hit P3.08 trillion as of the end of October, up by 15.8 percent from P2.79 trillion as of the same period in the previous year.

Officials said credit growth and successful fund-raising activities had helped the Philippine economy post a growth of 6.5 percent in the first three quarters despite weakness of the global economy.

Rising credit and enormous liquidity in the domestic capital market have elicited speculations that the Philippines may be facing risks of overheating within a few years, unless monetary officials do something to temper the trend.

Sam Miguel
01-15-2013, 10:58 AM
Stocks sustain rally, hit new peak

By Neil Jerome C. Morales

(The Philippine Star) | Updated January 15, 2013 - 12:00am

MANILA, Philippines - The main stock index moved closer to uncharted territory as investors cheered positive prospects of economic and corporate income growth in the country.

The benchmark Philippine Stock Exchange index or PSEi climbed 0.7 percent or 42.15 points to close at 6,093.90, marking the seventh time the bellwether index reached an all-time high this year.

The broader All Shares index also gained 0.53 percent or 20.09 points to end at 3,837.14.

“We expected barometers to move higher driven by expectations of improved earnings growth for 2013,” Grace Cerdenia, analyst at brokerage firm 2Trade-Asia.com, said in a phone interview.

“Bulk of the gains were driven by property and financial firms that are sensitive to inflation and interest rates,” she said, adding that interest and inflation rates are likely to remain low.

All sub-indices were in the green, led by financial companies that advanced 1.53 percent or 24.06 points to 1,599.10 while property companies rebounded from a slump last Friday, adding 1.48 percent or 34.81 points to close at 2,381.35 yesterday.

Market breadth was positive as advancers outpaced decliners, 94 to 71, while 44 stocks did not change. Value of shares traded slightly eased to P9.28 billion from P9.43 billion on Friday.

Cerdenia said the main index might pierce the 6,100 mark “barring any unforeseen negative events abroad like disappointing industrial numbers in United Kingdom and US.”

Sam Miguel
01-15-2013, 11:03 AM
Phl on a high

SPYBITS

By Babe G. Romualdez

(The Philippine Star) | Updated January 15, 2013 - 12:00am

Filipino businessmen have a lot to look forward to this lucky Year of the Snake 2013. With the way the stock exchange has been performing, it would seem optimism is the order of the year. For the first time in 86 years, trading breached the 6,000-point mark several times last week, with the Philippine Stock Exchange index (PSEi) posting 6,091.18 on Jan. 9. The continued strong performance of the local bourse just goes to show that the country is off to a good start, with analysts forecasting GDP growth rates by as much as seven percent.

The continued appreciation of the peso, however, is causing a lot of OFW families to complain about the lowered value of dollar remittances – affecting their spending capacity. The Bangko Sentral has said it will buy more dollars to curb the rising peso, since this also affects the export and business process outsourcing industries.

In any case, more business activities are foreseen in several sectors touted as strong performers this year, namely business process outsourcing (expected to contribute over 500,000 jobs), tourism, construction, banking and real estate. Economic experts also point to the Aquino government’s increased public spending as one of the reasons for the country’s robust economic performance, with a big part of the P1.5 trillion in 2012 going to public infrastructure.

Dinner blowout compliments of P-Noy

Spy Bits sources disclosed that President Noy Aquino treated Philippine Stock Exchange (PSE) directors, a few businessmen and some friends at the Savoy Bistro along Kalayaan Avenue in Makati last night, apparently to celebrate the strong showing of the economy in 2012 – and the continued impressive performance of the local stock exchange since trading opened this year.

Savoy Bistro is said to be one of the President’s favorites, with the French/European cuisine resto also doubling as an art gallery, with paintings, antiques and interesting furniture – all for sale – strategically dotting the interiors. We’re told the place offers royalty-inspired European cuisine, with the appetizers that include foie gras, escargot, and cheese fondue among the more popular with frequent diners.

Sam Miguel
01-17-2013, 09:54 AM
PSEi seen hitting 6,500 mark

By Doris C. Dumlao

1:10 am | Wednesday, January 16th, 2013

Despite emerging valuation concerns, the main Philippine stock index is seen reaching new highs, likely to hit 6,500 by the end of this year, given ample liquidity in the market and improved risk appetite, online stock brokerage COL Financial said.

In a Jan. 11, 2013, research note, a COL research team led by company research head April Lee-Tan said the two major drivers of the global stock rally seen today were liquidity and improving risk appetite as central banks around the world simultaneously eased monetary policies last year. But while the uptrend would likely continue, the research team said “it (2013) would be a very volatile year,” considering that several developed economies were still in a fragile situation.

It said key global concerns that negatively affected the appetite for stocks had been resolved, resulting in an improved risk appetite: Greece did not exit the eurozone and instead received much-needed funds to escape bankruptcy; there is less risk that highly leveraged countries such as Spain and Italy would encounter problems refinancing their debts; the United States was able to avert a fiscal cliff; and the Chinese economy started to show signs of bottoming out.

“Similar to global markets, our local market benefited from ample liquidity and improving risk appetite. Although the fundamentals of the Philippines are far better compared to those of developed economies, making us a compelling buy for foreign investors, nothing has changed to prompt a further upgrade in our view of the economy or to justify the recent surge in the market,” the group said in the research note.

It said the country’s favorable economic outlook was already priced in, with the PSEi already trading at 17x forward-looking price to earnings (P/E)—the upper end of its historical range—and is also trading at a premium relative to its global peers.

A P/E ratio of 17x means investors are paying 17 times the amount of money they expect to make from the market.

“Although the absence of positive surprises and the expensive valuations make it difficult to justify a continuous increase in share prices under normal circumstances, we realize that, presently, the more relevant question is whether liquidity conditions will remain favorable as this would determine whether this liquidity-driven rally is sustainable,” according to the COL research note.

“Based on our analysis, liquidity will be here to stay at least for 2013 as there is no reason for interest rates to go up given the benign inflation, the fragile economic condition of developed countries, and the BSP’s (Bangko Sentral ng Pilipinas) focus on preventing a sharp appreciation of the peso,” she said.

COL Financial’s yearend target of 6,500 for the Philippine Stock Exchange index, an upgrade from its earlier forecast of 6,100, implied a P/E of 18.3x. Although this was already very high based on the PSEi’s historical trading range, it said the implied earning yield of 5.5 percent was still above the yields of some of the most popular investment vehicles, namely: time deposits (2-3 percent), special deposit accounts, or SDAs (3.5 percent) and the 10-year T-bonds (4.4 percent).

Sam Miguel
01-17-2013, 09:59 AM
JG Summit raises $750M from offshore debt deal

By Doris C. Dumlao

Philippine Daily Inquirer

7:43 am | Thursday, January 17th, 2013

MANILA, Philippines–A unit of Gokongwei-led conglomerate JG Summit Holdings has raised $750 million from the sale of long-term offshore debt, making history for executing the largest overseas corporate debt deal out of the Philippines.

Wholly-owned subsidiary JGSH Philippines Ltd. issued 10-year senior debt at 4.375 percent per annum.

The debt issue was upsized from original offer size of $500 million due to strong demand. The order book reached $6.6 billion, said Wick Veloso, chief executive officer of HSBC Philippines which is one of the issue arrangers.

“JG Summit is a credit that the market wants an exposure to and this is best shown by the overwhelming demand and tight pricing,” Veloso said.

“This is the largest Philippine corporate offshore issuance so far,” he said.

The JG group last week mandated HSBC, Citigroup Global Markets Ltd. and Credit Suisse Securities (Europe) Ltd. as joint bookrunners and joint lead managers for this issue.

Sam Miguel
01-21-2013, 08:22 AM
PH stocks seen testing new highs

Philippine Daily Inquirer

1:02 am | Monday, January 21st, 2013

Local stocks are seen attempting to climb new heights this week after the main index broke past 5,100 last week but many issues are becoming more vulnerable to profit-taking.

Last week, the main-share Philippine Stock Exchange index gained 1.44 percent to close at a new record high of 6,139.21. A new intraday peak of 6,150.62 was also established.

Banco de Oro Unibank chief strategist Jonathan Ravelas said the stock market was buoyed by strong investor sentiment that, in turn, was supported by strong macroeconomic fundamentals. “Local investors are discounting the market valuations and just focusing on the growth story of the country,” he said.

At current levels, Ravelas said the market still had some momentum to try 6,200-6,300 in the near term. “However, bear in mind that the market is already in an overbought state. Failure of the market to try these levels could call for further losses toward the 5,800-5,850 levels,” he said.—Doris C. Dumlao

Sam Miguel
01-23-2013, 08:37 AM
Long wait is over for PNB, Allied Bank merger

By Paolo G. Montecillo

Philippine Daily Inquirer

11:35 pm | Tuesday, January 22nd, 2013

The long-awaited merger of Philippine National Bank and Allied Banking Corp. will finally push through on Feb. 9, the PNB said in a disclosure on Tuesday, Jan. 22, 2013.

The long-awaited merger of Philippine National Bank (PNB) and Allied Banking Corp. will finally push through on Feb. 9, nearly four years after plans were first made public.

In a disclosure on Tuesday, PNB said its board had approved the effective date of the merger with its smaller sister bank on “Feb. 9 in accordance with Article 1.2 of the Amended Plan of Merger.”

Allied Bank’s own board has yet to approve the date of merger.

The PNB board approved the date of merger during a special meeting Tuesday.

Both banks, led by tycoon Lucio Tan, had already secured the remaining foreign and local regulatory approvals required for the transaction to push through.

Last week, the Financial Services Authority of the United Kingdom approved the change in control of Allied Bank Philippines (UK) Plc and PNB (Europe) Plc, paving the way for the upcoming merger of their parent banks.

Also, the Securities and Exchange Commission (SEC) approved the merger and the corresponding amendment to Philippine National Bank’s bylaws reclassifying PNB’s authorized preferred shares into common shares and increasing the number of directors to 15 from 11.

Once the merger takes place, PNB will be the surviving entity and become the country’s fourth-largest private bank, generating more than P1 billion in yearly cost savings.

Full integration would likely take place 18 months after first executing the merger, according to analysts.

The combined entity will have a distribution network of over 650 branches nationwide and total assets of over P514 billion.

It will maintain a presence throughout the Asia-Pacific region, apart from Europe, the Middle East and North America. PNB also aims to regain leadership in the remittance business.

As part of the consolidation, all the issued and outstanding common shares of Allied Bank will be converted to common shares of PNB at a ratio of 130 PNB common shares for each Allied Bank common share.

All the issued and outstanding preferred stocks of Allied Bank will also be converted to PNB common shares at a ratio of 22.763 PNB common shares for each issued Allied Bank preferred share.

Sam Miguel
01-28-2013, 08:26 AM
PH stocks seen to rise this week

By Paolo G. Montecillo

Philippine Daily Inquirer

3:57 am | Monday, January 28th, 2013

Local share prices may test record highs again this week despite the lack of any scheduled economic news to drive momentum from local investors.

Fund managers are instead expected to take their cue from news abroad, bolstered by the general optimism over the domestic economy.

The main Philippine Stock Exchange index (PSEi) ended the week at 6,167, up 0.46 percent week on week and just 4 points short of its highest close of 6,171.70.

Brokerage firm AB Capital said news from the United States, particularly on rosy corporate earnings and favorable legislation on the debt ceiling overshadowed the downbeat tone of the International Monetary Fund (IMF).

The IMF reduced its global growth forecast to 3.5 percent from 3.6 percent. It also expected the European region to contract due to the looming debt crisis.

“US corporate earnings, which came in better than expected, provided a breather to the IMF’s outlook,” AB Capital said. “At home, local investors also kept in mind the recent meeting of the BSP.”

The central bank maintained overnight borrowing and lending rates at 3.5 percent and 5.5 percent, respectively. Special deposit account (SDA) rates, however, were trimmed to 3 percent from 3.65 percent across all maturities.

“While there are no scheduled local economic data to be released [this] week, investors will hinge trades on overseas developments. On the technical side, we see the index testing 6,200,” the firm said.

“Breaking this level would be challenging given the divergence of momentum indicators. Support and resistance levels are at 6,100 and 6,200, respectively,” it added.

In a separate report, analysts from Accord Capital said the expected strong performance of the Philippine economy continued to fuel optimism among local investors.

“If the 2012 performance alone is the backdrop, the outlook for 2013 proves compelling to take on risks,” Accord Capital said, adding that the year-to-date GDP growth at the end of the third quarter already exceeded the government’s full-year target.

“This despite below-programmed spending marked by a slow rollout of the centerpiece PPP scheme and weak exports,” it added.

Sam Miguel
01-29-2013, 08:17 AM
Sucker’s rally

By Den Somera

Philippine Daily Inquirer

11:32 pm | Monday, January 28th, 2013

Alcorn Petroleum Resources Corp., Trans-Asia Oil and Energy Development Corp. and Philex Mining Corp. are three of several stocks that went into active market play, cornering a significant amount of retail investors’ money.

These three issues are now also the subject of animated discussions on whether any of them is actually riding on a “sucker’s rally.”

A sucker’s rally is a phrase used to describe the steady but temporary rise in the price of a stock or market. This happens when a stock’s price or market goes up, even though the rise is not supported by the fundamentals that actually affect the price of a similar stock or market. As such, said stock or market will falter and fall in no time.

It may also be explained in the following way: “The rally may continue just long enough for the ‘suckers’ to get on board, after which the market or specific stock falls.”

The case of APM is amazing. A speculative stock by any measure, it has undeniably brought in record-breaking amounts of money that bolstered both total daily and weekly market value turnover in recent times.

It also afforded investment returns not seen for a long time. For this, APM became, and remains to be, a strong trading and investment player in the market.

On June 29, 2012, APM was just doing P0.016 apiece. By December 28, 2012, it was way up at P0.145 a share, registering one of the most spectacular stock plays that yielded an investment return equivalent to what is called an “eight bagger” (rising in market price eight times over its original price of P0.016 a share).

On Jan. 4 this year, APM fell by 3.45 percent at P0.14 a share. Amazingly last Jan. 25, APM retook lost ground, closing at P0.157 a share. This makes APM only 7.10 percent away from its 42-week high of P0.169, and about 1,121.43 percent away from its 52-week low of P0.014.

Said market play happened, and continues to happen, because APM would become the holding company of businessman Lucio Co, the man behind the successful S&R Membership Shopping and the equally successful Puregold Price Club Inc.

Philex Mining Corp. (PX) is a “first line or blue chip” stock known for its strong track record in improving stockholders’ value as a result of its long record of profitability, good management and dividend-paying record.

After being counted out of the play by the market since the voluntary suspension of its Padcal mine in August last year, PX shares have jumped back to life.

On June 29, 2012, PX was trading at P27.85 apiece. By December 28, 2012, the market price of PX fell to P14.98 apiece.

This stemmed from the leak sustained by the tailing pond of PX in Itogon, Mountain Province. As a result, the company is confronted with the indefinite suspension of its operating permit, including the imposition of over a P1 billion in penalty.

This year, its share price climbed back. Last Jan. 11, it closed at P16.72 a share.

Trans-Asia Oil and Energy Corp. (TA) is a company whose revenue portfolio on power generation and supply, in addition to its mining and oil assets, appears to be promising.

TA’s power generation subsidiaries include South Luzon Thermal Energy Corp. (SLTEC), Trans-Asia Power Generation Corp. and CIP II Power Corp.

Its renewable energy subsidiaries are Trans-Asia Renewable Energy Corp. and Maibarara Geothermal Inc.

TA’s revenue portfolio is augmented by being a licensed Retail Electricity Supplier (RES) and a licensed Wholesale Aggregator (WG).

Based on its general plan, TA is set “to double its power capacity to 400 MW in the next few years.”

TA will also pursue a parallel program on its original business oil and gas exploration. At present, the company has minority participating interests in Service Contract (SC) 6, SC 14, SC 51, SC 55 and SC 69, along with an option to acquire additional participating interest in SC 52.

Also, TA continues to expand its portfolio and customer base at the Wholesale Electricity Spot Market (WESM) since 2007.

Just last November 2012, TA raised some P1.6 billion through a rights offering at an offer price equal to the company’s par value. This was to bolster its financial muscle to pursue growth plans.

Long aware of the rights issue, a sizable part of it ended up in the hands of a group of market makers now said to be behind the 40 percent rise in TA’s stock price since the offering.

Accordingly, the rights issue will be used for equity investments “in several power projects” that will include investments in “those power assets being offered for sale by the state-run Power Sector Assets and Liabilities Management Corp. (PSALM).”

The first stage of the company’s expansion plan involves the construction of the following: the P2.8-billion 20-MW Maibarara geothermal power project in Mt. Makiling, which is expected to “go on line by 2013,” and the P12-billion 135-MW coal-fired power facility in Batangas, in partnership with the Ayala Group, which is expected to “become operational by 2014.”

The second stage of TA’s expansion plan involves the “building of a second 135-MW coal-fired unit in Batangas worth P10 billion through SLTEC, the completion of the P13-billion 135-MW coal power plant in northern Mindanao, a second 20-MW unit for the Maibabara geothermal project, in partnership with the Yuchengco Group and the Philippine National Oil Co., costing another P3 billion and the P6.4-billion 54-MW wind power project on Guimaras Island.”

Most observers believe that APM plans to hold a follow-on offering in the first quarter. This will challenge its present pricing. Also, the current predicament of PX is intolerable. It’s a setback to its future. The fruits of TA’s plans, on the other hand, are yet far from being felt.

(The writer is a licensed stockbroker of Eagle Equities Inc. You may reach the Market Rider at marketrider@inquirer.com.ph, densomera@msn.com or at www.kapitaltek.com.)

Sam Miguel
01-30-2013, 08:25 AM
Philippine stock index breaches 6,200

Philippine Daily Inquirer

12:03 am | Wednesday, January 30th, 2013

MANILA, Philippines—The local stock market closed at another record high—the 11th since the start of the year—to breach the 6,200 level for the first time in history.

The main Philippine Stock Exchange index (PSEi) surged 42 points, or 0.68 percent, to close at 6,234.73 percent on Tuesday while the broader all-shares index gained a similar 0.69 percent.

The strong performance followed statements by President Aquino saying that the Philippine economy likely grew faster than 6 percent—the top end of the government’s target—in 2012. The government will release economic growth figures on Thursday.

All sub-indices were in the green, led by the property counter, which rose 1.37 percent. Lagging behind was the financial sector, which gained only 0.24 percent.

Total volume was 2.67 billion shares valued at P10.131 billion. The 109 advancers led 67 decliners while 40 issues were unchanged. The market’s performance defied expectations by analysts, who said a breather would be necessary for the index to advance past 6,200.—Paolo G. Montecillo

Sam Miguel
01-31-2013, 08:03 AM
Sun Life sees PH stock index hitting 7,000

By Doris C. Dumlao

Philippine Daily Inquirer

12:53 am | Thursday, January 31st, 2013

Global insurance giant Sun Life of Canada sees the Philippine stock index rising to as high as 7,000 this year on a favorable mix of historically low interest rates, high investor confidence, strong macroeconomic fundamentals and better global economic backdrop.

In a briefing on Wednesday, Sun Life chief investment officer for Asia Michael Manuel said that although the main-share Philippine Stock Exchange index might not accelerate in the same pace as seen in the last two years, there was still room for stock prices to hit new highs.

Over the next 12 months, Manuel said Sun Life’s base scenario was for the main index to rise to 6,500, suggesting an upside of about 12 percent from the end-2012 level of 5,812.73. He, however, added that the best-case scenario would be 7,000, given the rosy outlook presented by President Aquino to the Fil-Swiss community in Zurich over the weekend.

Speaking before advisers of Sun Life Asset Management Co. (SLAMC), the mutual fund management unit of Sun Life in the Philippines, Manuel said advisers should “not to be blinded” by index targets. He said it was the fund managers’ job to pick stocks so that investors could participate in the Philippine story.

He said the investment strategy for the Philippines this year would be to remain “overweight” (a recommendation to accumulate in excess of the benchmark index) on equities and invest in a combination of big and small caps. Sun Life’s preferred sectors are banking, infrastructure/cement, property and conglomerates, Manuel said.

During her opening speech in this internal forum, Sun Life Financial Philippines president Riza Mantaring said the Philippines was “in the middle of an economic upswing.”

“It really feels like we’re on the verge of economic take-off,” she added.

SLMAC’s target is to hit P50 billion in assets under management (AUM) by 2015 from some P29 billion as of end-January. Mantaring said the target this year would be to expand AUM to P35 billion which, she said, could easily be exceeded.

Manuel said the combination of low interest rates and high confidence was very good for the economy. The Philippine growth story, he added, was supported by robust consumer spending, improving investments, stable banking system and a much-improved government fiscal situation.

“The confidence is not only in the economy but also in the political leadership,” Manuel said.

Manuel said the Philippine sovereign was on the brink of getting an investment grade rating this year, predicting that an upgrade from Fitch Ratings and Moody’s would likely come ahead of Standard & Poor’s. He said the Philippines was in a better shape compared to Indonesia, which already enjoys investment grade.

In an interview after his presentation, Manuel said Sun Life’s stock market outlook for this year assumed a 12-percent growth in corporate earnings. Excluding telecom stocks, he said the average corporate earnings could grow by as much as 17 percent this year.

He said that price-to-earnings (P/E) ratio was at about 18x expected earnings for 2013. However, he said the market paid as high as 22x P/E in 1997 when the country was facing an Asian currency crisis.

Sam Miguel
02-01-2013, 09:20 AM
Profit taking dampens share prices

By Neil Jerome C. Morales

(The Philippine Star) | Updated February 1, 2013 - 12:00am

MANILA, Philippines - The Philippine Stock Exchange index (PSEi) retreated yesterday from record highs after a five-day run-up, declining 0.45 percent or 28.49 points to settle at 6,242.74 after investors took profits following the announcement that fourth quarter and full year Philippine economic growth beat expectations.

The main index traded in the green for most part of the day, posting a new intraday high at 6,332.27 before profit takers ruled the market in the afternoon.

“There is always this sell on news principle. The market’s run-up was based on two reasons: the reduction of the special deposit accounts’ rates and the expectations over gross domestic product (GDP),” Jomar B. Lacson, head of research at Campus, Lanuza& Co. Inc., said in a phone interview.

Lacson said investors pocketed gains after the strong GDP growth figures were announced.

Fourth quarter GDP posted a 6.8-percent growth, bringing full-year 2012 growth at 6.6 percent, which is above the five to six-percent forecast of the government.

The National Economic and Development Authority’s conservative forecast for this year is six to seven percent.

The decline in benchmark indices abroad also contributed to the drop in local share prices, Lacson said.

On Wednesday, Wall Street fell given news that the US economy surprisingly shrank in the fourth quarter, with the US Federal Reserve announcing that the economy is still struggling to regain its momentum.

Sam Miguel
02-04-2013, 09:53 AM
The impressive run-up continues

PHILEQUITY CORNER

By Valentino Sy

(The Philippine Star) | Updated February 4, 2013 - 12:00am

Two weeks ago, we wrote about the run-up of the PSE Index (The Run-up, Jan. 21, 2013). This started on Dec. 18, 2012 when the index was only at 5,623.85. Even after we wrote about it, the PSE Index continued its run-up and ended last week at a new all-time high of 6,318.61. The PSE Index has so far yielded a year-to-date return of 8.7 percent. With this, the impressive run-up of our index has delivered a whopping 12.4 percent in just 1 ½ months.

Even though the PSE Index was down 0.5 percent on the last day of January 2013, it ended the month 7.4 percent up. In the table below, we show that the performance of our index for January 2013 was one of its strongest starts in recent years. Moreover, the table shows that in the last 10 years, a positive return for the index in the month of January has always led to a positive return for the whole year.

Why is the Philippine stock market experiencing a run-up?

The PSE Index is experiencing a run-up because investors, both foreign and local, are becoming more interested about the Philippine growth story. While our growth profile before was inconsistent and cyclical, it has gradually strengthened and has become more of the structural type. This is due to the long-term structural transformation that our country went through over the past years (Secular Bull Market, Jan. 28, 2013). We believe that our country has all the necessary ingredients needed to deliver higher economic and corporate earnings growth for many years to come. In addition, record low interest rates in the country have caused investors to shift from fixed income to equities. In fact, our Philequity Fund has experienced record inflows for the month of January.

What are the recent catalysts for this continuing run-up?

1. Enlightened foreign ownership rules. The issue on the restrictive foreign ownership limits on local stocks caused our market to correct before. Though the Securities and Exchange Commission (SEC) has yet to finalize the guidelines for this, we laud SEC chairperson Teresita Herbosa for clarifying that the regulator looks to impose a more enlightened ruling that balances the protection of local business interests and the promotion of a healthy investment climate.

2. Special Deposit Account (SDA) rate cut. The Bangko Sentral ng Pilipinas (BSP) recently reduced the interest rate that it pays to its SDA depositors to three percent, cutting it by 50 basis points. The BSP’s SDA facility currently houses ~P1.7T in deposits. The BSP’s move to reduce the SDA rate has already caused a shift from SDAs to local stocks. This shift will likely persist in the near to medium term.

3. GSIS to increase equities exposure. Last week, GSIS president Bernie Vergara said that the fund was looking to increase its exposure to the local stock market to 19 percent from 15 percent last year. Since GSIS has P685 billion in investible funds, the move to increase its equity exposure by four percent may bring additional P27 billion worth of inflows to our stock market.

4. P-Noy: “All of us will be impressed.” Ahead of the release of the 4Q2012 and FY2012 GDP report, President Aquino remarked that everyone will be impressed with the country’s GDP growth. And indeed, investors were impressed. The country’s 4Q2012 and FY2012 GDP growth came in at 6.8 percent and 6.6 percent, respectively. These results exceeded the official target of five to six percent.

5. Philippines in the radar of foreign fund managers. Despite our stock market run-up, many foreign fund managers are still not invested in the Philippines. Recently, these fund managers have been coming to our country in droves, looking to invest in our stock market. Last week, JPMorgan brought some of its clients to the Philippines for a country visit and investor forum. JPMorgan has recommended an overweight rating on the Philippines for the past few years and reiterated this overweight call for the Philippines last week.

6. Positive contagion. Recent developments regarding the recovery of the US economy, the strong 4Q2012 GDP of China and the aggressive monetary easing of Japan have all driven their respective stock markets higher and have caused our stock market to also move higher, in tandem with theirs. As the old saying goes, “A rising tide lifts all boats.”

What is happening to other global stock markets?

In the past few months, global stock indices such as those of the US, Germany, China, Japan and the ASEAN have all been moving-up and have recently reached multi-year highs or new all-time highs (Global Bull Market, Jan. 7, 2013). In fact, last week, the Dow Jones Industrial Index closed above the 14,000 level for the first time since October 2007. Moreover, the S&P 500 Index delivered its best start since 1997 as it ended January 2013 with a five percent return.

Why do other global stock markets continue to move higher?

Global equities continue to move higher because the global macroeconomic headwinds that most investors have been concerned about seem to be dissipating. Problems such as the slow growth and the fiscal cliff of the US, the European sovereign debt crisis and the hard-landing scenario for China have all seemed to abate, at least for now. This budding global economic recovery is primarily due to the aggressive and creative intervention of global central banks led by Fed chairman Ben Bernanke (The Great Global Monetary Easing, Oct. 22, 2012).

The bold actions of global central banks, including the BSP, have also pushed interest rates to record lows. These have driven bond yields significantly lower, making stocks relatively cheaper investments compared to bonds. Moreover, the record low interest rates penalize those holding significant amounts of cash and bank deposits, driving them to instead use their money to invest in businesses or buy stocks.

Is the country’s high GDP growth sustainable?

Now that the country has proven that it can deliver high GDP growth, the next challenge will be sustaining GDP growth at the five-to seven percent level (6000, Jan. 14, 2013). This will be imperative in bringing a more inclusive type of economic growth that trickles down to the poor. Aside from this, the government must leverage on its strong fiscal position in order to aggressively roll-out infrastructure projects via Public-Private Partnerships (PPP). At this point, investments in infrastructure are very much needed to propel our economic growth to the next level and precipitate the growth of sectors such as manufacturing, tourism and exports. We are fortunate that our current government is aware that there is much to be done and that efforts should be focused in sustaining our high GDP growth.

Will corrections happen?

Although there are numerous reasons for our bullishness, we believe that corrections will always be there as they are part and parcel of a bull market. However, corrections are extremely hard to predict and no one really knows when they will happen or how long and how deep they will last. Because of our stock market’s run-up and the relatively short and shallow corrections that we experienced, many investors and professionals have missed the boat trying to anticipate and preempt a significant correction. One cannot keep waiting for corrections when the bull is running its course.

How do we trade this market?

While buying on dips might be preferable, we have not really had any significant corrections recently. Considering this, we recommend buying in tranches and using peso cost averaging in gradually increasing one’s exposure to Philippine stocks. We also recommend buying stocks that represent the unique Philippine growth story. These are stocks in the consumer, retail, banking, utilities and property sectors. For those who cannot monitor the market on a daily basis, it might be good to invest your money in a mutual fund that will be handled by a professional fund manager. For those who have followed our advice before and are long Philippine stocks, our advice stays the same: stay the course (Staying the Course, January 2012), keep your winners (Hold on to your winners, April 16, 2012) and invest in companies with solid fundamentals and strong earnings growth.

Due to the impressive run-up of the local stock market and the improving global macro picture, we are looking to upgrade our PSE Index target of 6,700 to 6,800. Our views and assumptions for the PSE Index target will be explained in greater detail on our investor briefing on Feb. 19, 2013.

Sam Miguel
02-05-2013, 07:59 AM
PSEi seen hitting 6,500 mark

By Doris C. Dumlao

1:10 am | Wednesday, January 16th, 2013

Despite emerging valuation concerns, the main Philippine stock index is seen reaching new highs, likely to hit 6,500 by the end of this year, given ample liquidity in the market and improved risk appetite, online stock brokerage COL Financial said.

In a Jan. 11, 2013, research note, a COL research team led by company research head April Lee-Tan said the two major drivers of the global stock rally seen today were liquidity and improving risk appetite as central banks around the world simultaneously eased monetary policies last year. But while the uptrend would likely continue, the research team said “it (2013) would be a very volatile year,” considering that several developed economies were still in a fragile situation.

It said key global concerns that negatively affected the appetite for stocks had been resolved, resulting in an improved risk appetite: Greece did not exit the eurozone and instead received much-needed funds to escape bankruptcy; there is less risk that highly leveraged countries such as Spain and Italy would encounter problems refinancing their debts; the United States was able to avert a fiscal cliff; and the Chinese economy started to show signs of bottoming out.

“Similar to global markets, our local market benefited from ample liquidity and improving risk appetite. Although the fundamentals of the Philippines are far better compared to those of developed economies, making us a compelling buy for foreign investors, nothing has changed to prompt a further upgrade in our view of the economy or to justify the recent surge in the market,” the group said in the research note.

It said the country’s favorable economic outlook was already priced in, with the PSEi already trading at 17x forward-looking price to earnings (P/E)—the upper end of its historical range—and is also trading at a premium relative to its global peers.

A P/E ratio of 17x means investors are paying 17 times the amount of money they expect to make from the market.

“Although the absence of positive surprises and the expensive valuations make it difficult to justify a continuous increase in share prices under normal circumstances, we realize that, presently, the more relevant question is whether liquidity conditions will remain favorable as this would determine whether this liquidity-driven rally is sustainable,” according to the COL research note.

“Based on our analysis, liquidity will be here to stay at least for 2013 as there is no reason for interest rates to go up given the benign inflation, the fragile economic condition of developed countries, and the BSP’s (Bangko Sentral ng Pilipinas) focus on preventing a sharp appreciation of the peso,” she said.

COL Financial’s yearend target of 6,500 for the Philippine Stock Exchange index, an upgrade from its earlier forecast of 6,100, implied a P/E of 18.3x. Although this was already very high based on the PSEi’s historical trading range, it said the implied earning yield of 5.5 percent was still above the yields of some of the most popular investment vehicles, namely: time deposits (2-3 percent), special deposit accounts, or SDAs (3.5 percent) and the 10-year T-bonds (4.4 percent).

PSEi breaches 6,400 mark

7:50 pm | Monday, February 4th, 2013

Local stocks rallied further into uncharted territory on Monday, breaking past the 6,400 mark for the first time, as yield-seeking investors snapped up equities amid rosy prospects for the year.

The main-share Philippine Stock Exchange index soared by 117.37 points or 1.86 percent to close at a new record high of 6,435.98. A new intraday peak was likewise touched at 6,449.44. This marked the local stock market’s 14th record breakout for the year and the 75th under the term of President Aquino, whose anti-corruption campaign has boosted investor confidence in the country.

Fund managers said new money was pouring into the market as reflected by the increasing value turnover. With interest rates at record-low levels, some investors are reallocating more funds into equities. Based on anecdotal evidence, there is a growing list of institutional and retail investors buying into the market for the first time.

At the same time, the upbeat sentiment on Wall Street is also supporting regional risk appetite specially after the latest US jobs and factory data boosted expectations of economic recovery.

“Demand for local equities is very strong,” said the chief of a leading foreign brokerage.

Value turnover at the stock market yesterday amounted to P11.18 billion. There were 130 advancers that overwhelmed 50 decliners. All sectors jumped but the day’s biggest gainer was the holding firm counter (+2.57 percent) as conglomerates are seen as a proxy to the growing economy. Doris C. Dumlao

Sam Miguel
02-06-2013, 10:14 AM
Stock market rally continues

10:57 pm | Tuesday, February 5th, 2013

Local stocks rallied to a new record-high Tuesday, bucking the downtrend across the region, on good local macroeconomic outlook for 2013.

Overcoming rough trading early in the session, the main-share Philippine Stock Exchange index added 34.51 points or 0.54 percent to a new all-time high of 6,470.49. This marked the 15th record finish for this year and the 76th since President Aquino assumed office in mid-2010.

Dealers said the Philippine growth story was attracting new investors despite a still cautious global outlook for 2013. A benign inflation rate of 3 percent in January also affirmed the soundness of the country’s economic fundamentals. At the same time, historically low interest rates are encouraging investors to seek better yields in equities.

John Sturmey, Religare global head of equity capital markets based in Singapore, said yesterday that there was a good chance that the Philippine Stock Exchange index could rise by another 20-25 percent this year. “Every single fund we talk to, they want to look at the Philippines,” he said.

The local stock market has been rising for the third consecutive day. The index is now nearing the 6,500 mark that President Aquino recently cited as wishful thinking for his birthday on Feb. 8.

Most counters firmed up yesterday except for property (-0.51 percent). The biggest gainer was services (+1.03 percent). Value turnover for the day amounted to P9.57 billion. There were 87 advancers that narrowly edged out 84 decliners.

The day’s biggest index gainers were AGI (+3.54 percent), SMDC (+2.99 percent) and ICTSI (+2.33 percent) while BPI, Petron, SMIC, BDO, Philex, PLDT and AEV also contributed large gains to the PSEi.

On the other hand, investors pocketed gains from Megaworld (-3.71 percent), Metrobank (-1.3 percent), ALI (-0.33 percent), SM Prime (-0.77 percent) and DMCI (-1.82 percent).

Outside of index stocks, Puregold and Bloomberry also fell on profit-taking. Doris C. Dumlao

Sam Miguel
02-07-2013, 08:41 AM
Local stock index closes lower after 3 days of highs

By Doris C. Dumlao

Philippine Daily Inquirer

5:34 pm | Wednesday, February 6th, 2013

MANILA, Philippines—Local stocks took a breather on Wednesday after a three-day winning streak that propelled the main index to record highs.

The Philippine Stock Exchange index shed 39.14 points or 0.6 percent to close at 6,431.35.

Elsewhere across the region, markets were mostly higher due to an improved global economic outlook. At the local market, sentiment remained buoyant but profit-taking was more tempting for some.

By counter, the services (-1.08 percent) and property (-2 percent) counters weighed down the main index the most.

Investors sold shares of SM Prime, AGI, ALI, PLDT, SMIC, AC, BPI, Megaworld, FGEN and MPI. There was profit-taking also on D&L, Bloomberry and Puregold.

On the other hand, BDO, EDC, Metrobank, Petron, URC and SMC bucked the day’s downturn. GT Capital also posted gains in heavy volume.

Sam Miguel
02-07-2013, 08:41 AM
Officers of delisted companies beware!

By Francis Lim

Philippine Daily Inquirer

2:05 am | Thursday, February 7th, 2013

Listing a company with the Philippine Stock Exchange (PSE) is one thing; maintaining the company’s status as a listed one is another.

A new criterion for maintaining the listed status of a company is the continuous compliance with the Minimum Public Ownership Rule (MPO rule) of the PSE.

The MPO rule requires companies listed with the PSE to ensure that at least 10 percent of their outstanding capital stock is owned by the public.

The PSE has strictly implemented the rule since Jan. 1, 2013. There are seven listed companies whose shares have been automatically suspended from trading because of non-compliance with the rule. They have a combined market capitalization of P801.5 billion.

These noncompliant companies have until June 30, 2013, to comply with the MPO Rule. If these companies still fail to comply, then they shall be automatically delisted from the PSE.

Tax consequences

As discussed in my previous columns, shareholders of delisted companies selling their shares will not benefit from the stock transaction tax, which is only one-half of one percent of the transaction value. Instead, they have to pay the capital gains tax, which is a final tax of 5 percent on net capital gains not exceeding P100,000, and 10 percent for net capital gains in excess of P100,000. So, unless the PSE does something to fend off the potential damage, minority shareholders holding at least P80.1 billion worth of shares of the seven suspended companies stand to be prejudiced by their delisting from the PSE.

Non-tax consequences

While a delisted company may not really care about these tax consequences (considering that the tax burden is on the investors), there are possible non-tax consequences that should be of concern to the company and their directors or officers.

The MPO Rule explicitly provides that “the five-year prohibition on relisting” in the PSE under the Delisting Rules of the PSE shall apply to companies that are subject to automatic delisting for non-compliance with the MPO Rule.

The relisting prohibition is two-pronged:

– The company “cannot apply for relisting within a period of five years from the time it was delisted;” and

– The directors and executive officers of the company are “disqualified from becoming directors or executive officers of any company applying for listing” within the same period.

The first sanction is pretty straightforward. It applies only to the company that has been delisted. It does not apply to any other company, such as related companies of the delisted company.

The second sanction is another story, because the penalty extends beyond the delisted company. Some say that directors and executive officers of the delisted company cannot become directors or officers of “any” company applying for listing within the same five-year period.

Following this view, the following illustrations demonstrate the possible legal consequences:

If Mr. X is a director of the delisted company, he is disqualified from becoming a director or officer of another company (related or unrelated to the delisted company) that applies for listing with the PSE within the same five-year prohibitory period; and

The MPO Rule uses the phrase “applying for listing” without qualification. Those in the industry are aware that there are different kinds of listing such as: IPO listing; follow-on listing; and listing of top-up shares. So, if Mr. X is also a director or executive officer of another listed company (whether or not related to the delisted company) that wants to do a “follow-on” or “top-up” listing of its shares, then Mr. X cannot be a director or officer of that company.

I’m sure that there are several listed companies (especially conglomerates) that have interlocking directors or officers.

Before it is too late, these companies better be aware of the possible non-tax consequences.

The question now is: Is there a way out of this potential legal dilemma? That can be the subject of further discussion.

Sam Miguel
02-08-2013, 09:59 AM
Phl stocks buck regional downtrend

By Neil Jerome C. Morales

(The Philippine Star) | Updated February 8, 2013 - 12:00am

MANILA, Philippines - Local share prices rebounded yesterday, bucking the cautious trading in Asian markets ahead of a European Central Bank’s policy meeting.

The Philippine Stock Exchange index rose 0.45 or 28.64 points to close at 6,459.99, recovering from a profit taking spree a day ago as investors picked second liners.

The broader all shares index gained 0.61 percent or 24.75 points to 4,062.70.

Investors reallocated investments in favor of second liners that might benefit from the continued low interest rate environment and market liquidity, Freya Natividad, investment analyst at brokerage firm 2Trade-Asia.com, said in a phone interview.

Local fundamentals shielded the country from worries in neighboring markets, Natividad said.

In Asia, the trading day was marked by cautiousness as investors waited for the results of the ECB policy meeting. Investors also watched out for indications on the economic growth of the European economic bloc.

Japan’s Nikkei 225 lost 0.93 percent or 106.68 points to 11,357.07 while the Hong Kong’s Hang Seng index declined 0.4 percent or 79.93 points to 23,177.

On Wednesday in Wall Street, the Dow Jones industrial average inched up 0.05 percent or 7.22 points to 13,986.52 while the broader Standard & Poor’s 500 index barely rose 0.05 percent or 0.83 points to 1,512.12. The market also awaited the ECB policy meeting.

Sam Miguel
02-11-2013, 08:41 AM
Lighter trading seen in PH market this week

Philippine Daily Inquirer

2:11 am | Monday, February 11th, 2013

Stock trading this week is seen more muted in volume compared to previous weeks as key Asian markets observe a long lunar turnover holiday break but the unfolding local corporate earnings season might provide some fresh catalysts, analysts said.

Last week, the main-share Philippine Stock Exchange index gained 140.06 points, or 2.22 percent, to close at 6,458.67 on Friday.

“Funds based in Hong Kong and Singapore will be quiet. Local investors will be quiet also because of the Philippine Business Bank initial public offering (IPO) and if foreign buying will still be strong, it will be mostly due to investors from US and Europe,” said Joseph Roxas, president of Eagle Equities Inc.

PBB is raising P3.2 billion from its IPO at a price of P31.50 a share or about 1.35 time the thrift bank’s book value. An IPO tends to suck liquidity from the stock market.

Maria Arlysa Narciso, an analyst at AB Capital Securities, said foreign developments were unlikely to have a negative sway on the local market’s performance this week.—Doris C. Dumlao

Sam Miguel
02-11-2013, 09:30 AM
Deceptive securities label

By Raul J. Palabrica Jr.

Philippine Daily Inquirer

2:07 am | Friday, February 8th, 2013

Scriptwriters and finance experts share a common trait: They are imaginative in the choice of titles and plots for their crafts.

Depending on the needs of their clients, investment advisers have devised financing schemes that go by such names as long-term commercial papers, collateralized debt obligation, convertible stocks and global depositary receipts.

Like commercial advertisements, these labels are aimed at attracting the attention of potential investors and, with the right pitch, encourage them to entrust their money to issuers or underwriters of securities or financial instruments.

The road shows or promotional activities undertaken to ramp up interest on these issuances are no different from those done by advertising companies when they vie for the accounts of big ticket clients.

Good features are highlighted, sometimes to the point of exaggeration. Handicaps are played down or given a spin that make them look like blessings in disguise instead.

The idea is to put their best foot forward and pray that the prospective client will buy their line.

Stiff competition in the industry has forced some investment companies to take a similar approach in the promotion of their products to the disadvantage of small (or retail) investors, or those who do not have the expertise and resources of hedge funds, pension plans and other big league investment groups.

Features

In recent years, securities described as “perpetual bonds or stocks” have been floated or offered to the public by some companies to meet their expansion requirements or to pay debts earlier incurred for corporate purposes.

For the layman, perpetual means forever or without any time limit. Not so for business people who have given it a different meaning when used to describe bonds or securities.

Perpetual bonds are fixed income instruments (or corporate debt obligations) that do not have maturity dates. They pay their holders a high fixed interest rate up to a specific date but the return of the principal is not guaranteed. It may or may not be paid back depending on the terms of the offer.

Perpetual stocks (often in the form of preferred shares) have similar features. They pay a fixed dividend rate and are non-voting, non-convertible to common stocks and non-participating, i.e., their holders have no share in the corporation’s assets in case of liquidation.

Contrary to their common sense meaning, these instruments are hardly perpetual or, at best, coterminous with the corporate life of their issuers.

They can be redeemed or bought back by their issuers, at their sole option, after, say, five years in the case of bonds and three years for stocks, from the date of their issuance.

To make the offering more attractive, the issuers promise to “step up” or increase the interest or dividend rate by a certain percentage if they are not redeemed on their indicated redemption dates.

Discretion

The holders of these bonds or stocks have absolutely no say on the productive life of the instruments they own. All the cards are stacked in favor of the issuer on when the interest or dividends shall continue to be paid or when the principal will be repaid.

In investment jargon, these securities are “callable,” or subject to termination at the discretion of their issuers.

Thus, if, for example, the issuer thinks it can secure fresh money from the market by selling new bonds at interest rates lower than those given to the bonds earlier issued, it may opt to redeem the latter ahead of its maturity period and, in the process, save on interest payments.

A similar action may be taken for perpetual shares if the company has surplus profits that allow it to buyback those shares (whose proceeds may have enabled it to rake in additional revenue) and, as a result, forgo further dividend payments.

For high-flying investment groups, the hefty interest rates that accompany perpetual bonds make good business sense. The payoff becomes higher if the principal is also repaid. And even if it is not, their profits from other investments could make up for the difference.

But not for small investors. If the bond is called and their principal returned, they have to content themselves with reinvesting their money in bonds that offer lower rates.

Dividends

In the case of perpetual shares, while the diminution of dividend payments in case the stocks are called would not adversely affect the bottom line of professional investors, the same cannot be said of small investors.

Most retail investors put their money in these stocks in the expectation that they will enjoy dividend payments from the time they fall due until the stocks remain in their hands.

The dividends are looked at as “pension funds” that can pay for or supplement the holders’ daily financial needs. If the shares are redeemed and the dividend payments cut short, finding another venue for investment that offers similar benefits would not be easy.

In the first place, there are not that many companies that offer securities to small investors that provide healthy dividend rates. And if there are, the offerings are far and in between. Such offerings are made only when the need arises or the market conditions favor taking that action.

So what’s in a name? A lot and more, especially if it is attached to something that can result in adverse financial consequences to people who can be misled by it.

Word of advice to potential investors in financial instruments: Examine carefully their terms and conditions before letting go of your money. If in doubt, consult a knowledgeable friend.

Sam Miguel
02-12-2013, 09:05 AM
PSEi touches 6,500 mark

Philippine Daily Inquirer

8:42 pm | Monday, February 11th, 2013

Local stocks started the first trading day of the Year of the Water Snake with a bang, allowing the main index to touch 6,500 for the first time, before retreating at the close.

The main-share Philippine Stock Exchange index ended 0.66 point or 0.01-percent lower at 6,458.01 after hitting a new record intra-day peak of 6,500.08.

“Now, we cannot discount the fact that the market may either pause or do a slight pullback, say close to 6,200 (-4.6 percent) or a bear-case scenario close to the psychological support at 6,000 (-7.7 percent),” said DA Market Securities in its research note issued on Monday.

The PSEi has risen three times since bottoming out in 2008 during the US-epicentered global financial crisis.

“To give a rough guide to market cycles, crises have happened every 10 years—1987, 1997, 2007. Could the next one still be in 2017? While that definitely necessitates further discussion, it is important to note that like in the 1997 Asian Crisis, the Philippines learned from the 2007 global financial crises, and is even stronger today,” the research said.

Services and property weighed down the main index while the financial, industry, holding firms and mining/oil counters eked out modest gains.

Value turnover was muted at P5.88 billion as many investors and Asian stock markets were on a holiday break due to the Lunar Year turnover.

Despite the main index decline, there were 83 advancers that narrowly edged out 81 decliners while 48 stocks were unchanged.

Investors sold down shares of AC, AGI, Globe, BPI, ALI, Metrobank, DMCI, Petron, PLDT, MPI and Jollibee. Among non-index stocks that gained sharply in heavy trade were NiHao (+4.21 percent) and Coal Asia (+16.48 percent). Coal Asia announced the acceleration of its coal mine production to October this year from the original target of January 2014. Doris C. Dumlao

Sam Miguel
02-18-2013, 10:23 AM
Understanding the current bull market and how to profit from it

PHILEQUITY CORNER

By Valentino Sy

(The Philippine Star) | Updated February 18, 2013 - 12:00am

Tomorrow, Philequity and Wealth Securities will be conducting a joint forum for our clients and investors at the PSE Auditorium in Tektite. In our presentation, we will go back in time to give you a historical perspective of critical events, both globally and locally. It is in identifying and understanding these historic and momentous moments that one will be able to understand the current bull market. Moreover, it is in understanding this current bull market and what makes it tick that one will have the conviction to ride it as the market moves higher and higher.

We are in a bull market

With the PSEi’s steep run-up from 5,812 in end-2012 to 6,521 as of last Friday, there are many who think the market is too high or that it is poised for a severe correction. In many of our articles, we have said that the timing and depth of corrections are impossible to predict. Many traders who tried to do so end up getting whipsawed or are simply left behind by the market. For five straight weeks, we laid out our strong belief that we are in a bull market (see Global Bull Market, 6000, The Run-up, Secular Bull Market, The Impressive Run-up Continues, 2013 Jan. 7 – Feb. 4). Since we called the bottom in an article written nearly four years ago (666 on 3-6-9, 13 April 2009), the index has risen by 370 percent (see chart below). If we include the peso’s appreciation since March 2009, the index is actually up 387 percent in dollar terms, nearly a four-bagger. A strong start to 2013 along with our presentation, should be enough to convince everyone that, indeed, we are in a bull market and that this bull market should continue for years to come.

Philequity Corner as a Strategy Piece for Everyone

The past five years have been very turbulent for stock markets around the world. From crisis to green shoots to yet another crisis, the entire investments world was left confused, with no one really knowing whether we would plunge into another bear market or hit new highs. It was a time when world leaders were unseated and central bankers became the gods who created this current bull market. We have written about the various events that rocked the US, Europe, China and even the Philippines. During our presentation tomorrow, we will be explaining to you how one could have navigated the rough seas and made money by just following our articles. We will be going through selected articles and you will be able to see how close to reality our predictions were. More importantly, you can be the judge of whether you would have made or lost money by following them.

10 keywords

Speaking of predictions, we also wrote that “books will be published about this tumultuous and historic moment” (see The Rescue, Sept. 22, 2008 ). Since then, numerous books and bestsellers have been written about the events that transpired since the US financial crisis, and we expect many more to be written about the bull market we are in now. To aid our investors in analyzing what has happened before and what is currently transpiring, we will highlight 10 keywords. With just these 10 keywords, you will be able to understand why we have this current bull market, why it continues to make its bull run and how you can profit from it.

Secular and structural

In our presentation, the spotlight will be on the Philippines. We will explain why the Philippines is in a secular bull market that will go on for many years to come. We will also discuss the recent factors that propelled the market higher, as well as future catalysts like the investment grade rating. We will also show why the Philippine economy has moved from being cyclical to structural. Thus, the crises that happened to US and Europe were actually opportunities to increase exposure to Philippine stocks. However, while there are many other reasons to be bullish, there are risks that may derail our bull market which we also have to consider.

Charts galore!

While text does a good job of describing an idea, we think that a picture, or in this case a chart, can paint a thousand words. Our presentation will be peppered with charts of various stock markets, selected equities, and even currencies. Our head of research, who is also one of the best technical analysts in the country, will explain to everyone the technical implications of each chart. Chart patterns are very helpful in timing entry and exit, so while fundamental analysis is indispensable in stock-picking, correct technical analysis will be able to boost returns significantly. For instance, we will show where we think the PSEi and Philippine peso (see below) are headed. Chartists out there are sure to enjoy this portion of our presentation.

Tomorrow, we will present how the peso is faring against the Euro, US dollar, Japanese yen, Indian rupee, and even gold. We will discuss the strength of the peso. Should the BSP declare that P40 to the dollar is the line in the sand and the ultimate bottom? Should our central bank make their last stand at 40? Should the BSP pronounce that anything beyond 40 is counterproductive? Should BSP join the global currency wars?

Looking forward – new year, new target, new picks

Our previous target for the index was 6,800. However, in light of the PSEi’s strong move in January, we are inclined to upgrade our target. We will also present our stock picks for 2013. Feng shui played no part in our choice of companies to invest in. Instead, we based our decision on the company’s fundamentals and growth story. We will also show what sectors we think will outperform this year and the reasons behind it. After that, we will be having an open forum where you can ask any of the analysts and fund managers more specific questions about the presentation or anything related to the stock market.

Again, tomorrow’s briefing will start at 3:30 p.m. at the PSE Auditorium in Tektite. Because of the overwhelming response of clients who want to attend this presentation and due to limited space, the briefing is limited to investors of Philequity, clients of Wealth Securities and registered guests.

Sam Miguel
02-19-2013, 08:18 AM
SMB to be delisted; tender offer at P20/share

Philippine Daily Inquirer

8:02 pm | Monday, February 18th, 2013

San Miguel Corp. has firmed up plans to delist crown jewel San Miguel Brewery Inc. from the local stock market and buy back shares at P20 each.

SMB is the biggest company to be brought back to private hands in recent years. A partnership between San Miguel Corp. and Japanese beer giant Kirin Holdings Co. Ltd., SMB has a market capitalization of P451.53 billion.

In a notice to stockholders published Monday, SMB said its board approved the voluntary delisting of the company as well as a tender offer to buy back 94.24 million minority shares—representing the 0.61-percent public float of the company.

The tender offer priced at P20 a share will start on March 4 and end on April 3 this year. The offer is 31.7-percent lower than SMB’s last traded price of P29.30 a share on Dec. 28 last year.

SMB was among the companies whose trading was suspended this year due to non-compliance with the 10-percent minimum public ownership required by the PSE for continued listing. Industry sources said SMB was unable to comply as SMC or Kirin was willing to reduce interest in the beer-maker.

Manny Cruz, chief strategist at local stock brokerage Asiasec Equities, said the delisting of SMB would have a favorable impact on parent firm SMC because the beer subsidiary was separately valued in the past. He said the fundamental value of SMB would now be better factored in into SMC’s share prices. “If you look at trading activities in SMC, there was some run-up as people have realized the fundamental value of the company,” he said. Doris C. Dumlao

Sam Miguel
02-19-2013, 08:19 AM
Stocks still rising; PSEi at 6,565.23

Philippine Daily Inquirer

8:03 pm | Monday, February 18th, 2013

The local stock market surged to a new record high Monday on good news from the recent G-20 meeting and a string of favorable local corporate developments.

The main-share Philippine Stock Exchange index added 43.59 points or 0.67 percent to close at its highest ever finish of 6,565.23. A new intra-day peak was also hit at 6,582.51.

The cyclical financial and property counters led the day’s upswing, both rising by more than 1 percent. Only the mining/oil counter was in the red, although Semirara had started to recover from last week’s selldown after a landslide at its Antique mine killed at least five people.

Value turnover amounted to P8.86 billion. There were 97 advancers that edged out 86 decliners while 41 stocks were unchanged.

The day’s biggest index gainers were SM Development (+11.18 percent), Petron (+3.37 percent), SM Prime (+3.17 percent), Semirara (+3.11 percent), Megaworld (+2.72 percent), Manila Water (+2.46 percent), Metrobank (+2.22 percent), BDO (+2.03 percent), Jollibee (+1.71 percent) and SMIC (+1.01 percent). Doris C. Dumlao

Sam Miguel
02-19-2013, 08:19 AM
Where to?

By Den Somera

Philippine Daily Inquirer

8:00 pm | Monday, February 18th, 2013

Trading ended higher last Friday, allowing the market to post a weekly gain of 62.97 points or 0.97 percent as the benchmark Philippine Stock Exchange index (PSEi) settled at 6,521.64.

The close last week was, however, 6.35 points or 0.09 percent lower than the all-time high of 6,527.99 established last Wednesday, although it still enabled the market to post a total gain of 708.91 points or 12.20 percent since the start of the year. This was the market’s seventh winning week.

To review, the market made a net advance of 158.72 points when it closed at 5,971.45 on the first trading week this year, which consisted of only three trading days, on a total volume of 6.20 billion shares and value turnover of P19.47 billion. Foreign buying dominated total foreign trading during the week.

This was followed by another net weekly gain of 80.3 points on the second week as the market closed at 6,051.75 on a volume of 13.13 billion shares and value turnover of P57.15 billion.

Noticeably, the rate of advance dropped to about half. A one-day selloff broke the market’s pace as it suffered a net loss of 72.61 points or 1.19 percent. Foreign buying saved the week as it hit P36.35 billion, compared to the foreign selling of P20.14 billion.

A two-day selloff occurred on the third week. This, again, limited the market’s advance to a weekly gain of 87.46 points or 1.45 percent as it settled at 6,139.21. Foreign buying hit P20.89 billion while foreign selling amounted to P20.76 billion. Total volume and value turnover remained the same.

The market’s rate of advance further slowed down on the fourth week. It was hit by another two-day selloff. As a result, the market managed to make a weekly gain of only 28.43 points or 0.46 percent as it settled at 6,167.64.

Were it not for the increase in foreign buying this week, the market could have posted a loss.

The market got better on the fifth week, with foreign buying growing bigger to P29.54 billion, compared to foreign selling of only P23.90 billion. The total volume was only 14.16 billion shares but the value turnover was P52.84 billion, signifying a greater market interest in big cap stocks. The market ended the fifth week with a net gain of 150.97 points or 2.45 percent.

Despite a two-day selloff that occurred on Wednesday and Friday of the sixth week, the market was able to make a net advance of 140.06 points or 2.22 percent as it closed for the week at 6,458.67.

Due to a two-day selloff on Monday and Thursday last week, the market managed to move up by only 62.97 points or 0.97 percent.

The total volume for the week dropped to 11.45 billion shares while the total value turnover was down to P36.49 billion. Foreign buying and foreign selling stood almost even at P17.78 billion and P16.52 billion, respectively.

After the record performance of the market during the period covered, when 16 record highs were posted, it is now treading in what market analysts call “uncharted territory.” In other words, it has broken out of known levels never before reached or attained. Will it, then, continue to go higher?

Past three years

The market’s record in the past three years may provide some clues. Like Wall Street and the other markets around the world, our market has been on a run-up, as in a bull market rally, after the subprime crisis of 2008.

The subprime crisis broke out in August of 2008. This happened after the US market and equity markets around the world enjoyed a period of continuous uptrend for about three years. This was also true with the local market.

The market, before the subprime crisis, has been on a rally. However, the rally seemed to have reached its peak in December 2007. And like the other equity markets of the world, ours fell into a downtrend thereafter.

Our market was recorded to be already at about 3,079.64 on Feb. 26, 2008. By July 6, 2008 it was at only 2,450.55, down by 20.68 percent.

On Aug. 8, 2008, when the subprime crisis broke into the open, our market was in the process of a small rally; it was up at 2,602.38.

It took the market up to March 2009 to experience the full impact of the subprime crisis. On March 17, 2009, the market was down 32.39 percent as it hit the bottom at 1,759.33.

Three months later or by June 2009, the volume of transaction started to build up. This went on until December 2009. On the last trading day of said year, the market was back at 3,052.68. It has risen by 1,293.35 points or 73.51 percent.

In the following 10 months, the market was moving lower, then higher like in a big pendulum swing that on Oct. 29, 2010, the market hit 4,268.74, up by 39.36 percent.

The market faltered and had moved sideways in the next five months until April 6, 2011 when it went back to 4,212.52.

Due to intervening developments in Europe, the market pulled back again in the next four months that on Sept. 28, 2011 it was down by 12.47 percent at 3,687.12.

On April 23, 2012 or almost seven months after, the market hit its peak for the year of 5,163.09, up 22.57 percent.

Weakened by a month of selloff, the market fell by 3.97 percent to 4,958.43 on May 22, 2012. By July 24, 2012, however, the market was again up by 191.63 points or 3.71 percent at 5,354.72.

Since then the market moved sideways but as of last Friday, or seven months later, it was up by 1,166.92 points or 21.79 percent at 6,521.64.

Bottom line spin

After hitting the bottom of 1,759.33 on March 17, 2009, the market has been generally on the upward trend.

At last Friday’s close of 6,521.64, the market has moved up by 4,726.31 points or 270.69 percent from 1,759.22 in March 2009. In this regard, most of the market’s favorite stocks are already at the higher end of the price bands. This may mean they are now susceptible to a selloff or profit-taking.

But judging from the way the market has been performing in the last seven weeks, the sentiments of market bulls (buyers) will continue to prevail. However, the market may soon capitulate to a pullback before moving up again.

Sam Miguel
02-20-2013, 08:36 AM
Stocks rise in heavy volume

Philippine Daily Inquirer

11:58 pm | Tuesday, February 19th, 2013

Local share prices rose to record highs anew as more companies released full-year results for 2012, fueling optimism from investors looking for new opportunities amid low interest rates.

The main Philippine Stock Exchange index (PSEi) tore through the 6,600-mark Tuesday to finish at 6,620.72 points, up 0.85 percent or 55.49 points. The broader All-Shares index was also up 0.52 points, even though decliners outnumbered advancers, 94 to 75, while 52 issues were unchanged.

Turnover was healthy with 2.33 billion shares changing hands for P10.25 billion.

Online brokerage firm 2TradeAsia said excess stocks benefited from excess liquidity from investors looking for higher yields. “Notice that the lulls within local equities trading seem to run short as bargain-lookers seize on this trend to reposition on selected bets,” the firm said in a daily note.

Index movers were led by International Container Terminal Services Inc., which rose 5.01 percent. This was followed by Petron Corp. (3.86 percent), and Ayala Land (2.91 percent).

The day’s most active stocks were SM Investments Corp. and Alliance Global Group Inc., whose stocks rose 0.3 percent and 1.48 percent, respectively.

Former Ambassador and juice-drink magnate Alfredo Yao’s Philippine Business Bank also went public yesterday—the market’s first initial public offering for 2013. The bank’s shares rose 15.4 percent to close at P36.35 each and was the day’s third-most active stock. Paolo G. Montecillo

Sam Miguel
02-20-2013, 08:37 AM
Are there still cheap stocks to buy now?

By Henry Ong

Philippine Daily Inquirer

11:54 pm | Tuesday, February 19th, 2013

Q: I have been waiting for the stock market to correct for sometime so I could not find the opportunity to buy stocks at good price because the market always recovers quickly every time it falls. Now that the index has gone above 6,500, I am afraid if there are still good stocks to buy at this level. Can you advise me? – Lory Filomeno by e-mail

A: It may indeed be a little bit challenging to pick a good stock now as share prices at the moment are already very high. In fact, the Philippine market P/E average now is at 21x, making it one of the most expensive in Asia. But it doesn’t mean that you can not invest anymore. For as long as the stock market continues to enjoy strong investment demand and liquidity support, there will always be opportunities to make money.

You can take advantage of the current bullish momentum in the market by buying stocks that have not reached their fair values yet. The question is how you look for that opportunity. You need to look for stocks that are still undervalued.

There must be some stocks that may have underperformed compared to others because investors have either ignored them in favor of more active stocks or they have not yet recognized their true potential.

Start screening stocks in the PSE universe by doing P/E ratio comparisons. Although it can be difficult at this stage to find really cheap stock by P/E valuation, you can search for stocks that still offer good discount to market P/E. If investors are willing to pay at 21x P/E, then use this as your temporary benchmark until market sentiment has changed. But be aware that not all stocks with low P/E are good. There are some stocks that trade at low P/E because investors simply do not expect so much growth from the company.

P/E ratios do not tell you about the financial position of the stocks. Two stocks with similar P/E ratios may not have the same balance sheet. One stock may be conservative and use less debt, but the other one may be highly leveraged and more complicated. P/Es also do not tell you the quality of the company’s management. Get to know the people behind the company by reading the annual report. Evaluate the prospects of the business. How stable is the company? How sustainable is the company’s growth rate? How firm is the company in achieving its earnings target this year?

Once you have filtered the list of candidates, you can further fine tune it by comparing each stock’s price-to-book value ratio, price-to-cash flow ratio and price-to-sales ratio against industry and overall market average. You can easily access this data for free from your broker or data provider in the Internet.

Your stock does not need to top in all criteria but use this only as margin of safety for reference. The more ratios in the criteria the stock is able to compare well against others, the better. When you have already identified the stocks that you plan to buy, set your target price and timetable. At what price do you want to sell the stock if it were fairly valued? How soon do you think you can sell it at your target price?

Normally, you would expect the stock to outperform in the next six to 18 months, but with the current bullish market, it may be faster and you have to act fast too.

Last week, we have seen some few stocks that have started to move up quite actively on strong buying. One of these is SM Development Corp. This stock has been declining steadily since 2011, losing about 40 percent from a high of P9.49 to a low of P5.72 in late 2012. Investors had been selling this stock apparently due to disappointing lower earnings per share in 2012, which went down by 11 percent year on year, making the stock expensive at that time.

But a closer look at the latest income disclosure by SMDC to PSE last year shows that earnings were not that bad. In fact, total comprehensive income of SMDC went up by 38 percent year on year. Total sales for the last nine months in 2012 were also up by 42 percent compared to previous year.

The reason for the decline in earnings per share was due to the series of stock rights offerings the company did which increased the total number of shares outstanding. SMDC was trading at only 10x P/E or P6 two weeks ago before it caught the attention of the market. The stock is now trading at P8.85, up by 47 percent and has a current P/E of 15x, still cheap at current valuations. If we are going to apply the market P/E of 21x as benchmark, this stock should be trading at P12.

Ayala Land or ALI is currently trading at 47x P/E. If we are going to assume only half of ALI’s valuation as reference for other property stocks, the target P/E of SMDC should be 23x or P13 a share.

The case of SMDC is one of the examples that there are still undervalued stocks in the market today. These stocks may have been avoided by the market in the past for many reasons but these should have already been discounted in the share price by now.

Looking at the P/Es, there are few more stocks that are worth looking at. Some of these include Megaworld (14.8x), PLDT (16x) and Globe Telecoms (14x). When you buy a stock at this level in the market, even though the stocks that you buy are promising, try to always keep a level of flexibility. When you know that you have made a mistake in the process, be firm to recognize it and cut your losses.

Sam Miguel
02-20-2013, 10:50 AM
Market closes above 6,600 for first time

By Neil Jerome C. Morales

(The Philippine Star) | Updated February 20, 2013 - 12:00am

MANILA, Philippines - The local stock market continued to sizzle, scorching the 6,600-point barrier for the first time to close at a fresh all-time high.

Investors remain upbeat given robust earnings growth reported by several listed firms, analysts said.

The Philippine Stock Exchange index (PSEi), the gauge of the local bourse’s performance, climbed 0.85 percent or 55.49 points to close at 6,620.72 yesterday, erasing the previous all-time high of 6,565.23 recorded only last Monday.

Intraday high also posted a new record at 6,632.56, eclipsing the 6,582.51 a day ago.

“Investors remain upbeat of earnings report,” said Jonathan L. Ravelas, chief market strategist at BDO Unibank Inc.

For Freya Natividad, investment analyst at brokerage firm 2Trade-Asia.com, investors are starting to factor in earnings growth prospects. “Others are also going into the equities markets as they search fo investment instruments that could provide higher yields,” Natividad said.

“The stock market continues to gain interest especially given favorable corporate results and a new listed company,” Astro C. del Castillo, managing director of First Grade Finance Inc., said in a phone interview.

Thrift lender Philippine Business Bank (PBB) of the Zest-O Group debuted in the local bourse yesterday following a P3.2-billion initial public offering.

Wall Street was closed on Feb. 18 in celebration of the Presidents’ Day. Closer to home, Asian shares retreated yesterday.

Hong Kong’s Hang Seng index shed 1.02 percent or 238.03 points to 23,143.91 given concerns on more restriction in the financial sector while Japan’s Nikkei 225 slipped 0.31 percent or 35.53 points to 11,372.34 on profit taking.

In the local front, all subindices were in the green, except for mining and oil that declined 0.33 percent or 72.17 points to 21,924.22. The gainers were led by property companies that rallied 1.89 percent or 50.93 points to 2,752.53.

Sam Miguel
02-21-2013, 07:55 AM
PH stocks rally still gaining

Philippine Daily Inquirer

2:43 am | Thursday, February 21st, 2013

The local stocks index climbed to a new record high on Wednesday, perked up by news of a prospective consolidation of Henry Sy’s real estate businesses.

The main-share Philippine Stock Exchange index added 27.85 points, or 0.42 percent, to a new record closing of 6,648.57. A new all-time high of 6,690 was also hit in intraday trade.

“The market is currently overbought and we’ll be running into this problem for most of the year, resulting in P/E (price to earnings ratio) expansion,” said Juanis Barredo, chief technical analyst at COL Financial. However, he said there was still upward momentum as the PSEi remained above short-term support levels of 6,478 and 6,385.

On Wednesday, SM-related stocks traded briskly on news that the group was studying a proposal from investment bankers to merge property businesses to create the biggest property player in the country. By folding residential property arm SMDC and SM Land into property flagship SM Prime, the group is seen creating a full-range property firm that can withstand economic cycles.

Among SM stocks, SMDC posted the sharpest gain (+3.87 percent) while SMIC (+0.7 percent) and SM Prime (+1.14 percent) gained at a more modest pace.

AGI (+3.88 percent) also aided the PSEi’s rise. Property arm Megaworld (+0.26 percent), announced Wednesday the doubling of an investment plan for a township project in Mactan, Cebu, to P20 billion over a seven-year period.

Other stocks that contributed to the day’s upswing were Jollibee (+1.22 percent), PLDT (+1.12 percent), AEV (+0.95 percent), EDC (+0.82 percent) and ALI (+0.63 percent).—Doris C. Dumlao

Sam Miguel
02-22-2013, 09:01 AM
PH stock index marks a new high

Philippine Daily Inquirer

3:43 am | Friday, February 22nd, 2013

Local stocks rallied to a new record high on selective buying on Thursday, overcoming a rough start and bucking a regional downturn.

The main-share Philippine Stock Exchange index gained 18.84 points, or 0.28 percent, to close at 6,667.41. This marked its 20th record finish for this year.

The day’s rally was led by SMDC (+7.57 percent) and Jollibee (+5.93 percent).

SMDC and parent firm SMIC (+1.59 percent) rose as the market digested the impact of a property consolidation mulled by the group of Henry Sy.

AEV, ALI, RLC, MWC, BPI, BDO and PLDT also contributed to the day’s gains.

The market started the day in negative territory, reflecting cautious sentiment across the region due to talks that a big hedge fund was pulling out of commodities investing, along with reports that the US Federal Reserve may slow down its bond buyback program.

Despite the overall index gain, buying was very selective. As such, the day’s 59 advancers were outnumbered by 117 decliners, while 38 stocks were unchanged.

Value turnover amounted to P10.8 billion.—Doris C. Dumlao

Sam Miguel
02-25-2013, 09:10 AM
PH stocks seen to rise this week

Philippine Daily Inquirer

2:50 am | Monday, February 25th, 2013

Local stocks are seen trading with an upward bias this week, thereby retesting recent record highs, as month-end window-dressing could add to the buying momentum.

Last week, the main-share Philippine Stock Exchange index gained 2.2 percent to close at 6,665.06 as intraday dips, such as last Friday’s, were only seen as a fresh opportunity to get into the market.

“Despite already hovering at overbought levels, we still think that the PSEi has an incentive to go up as the Relative Strength Index (RSI) is at its strongest point. The month-end window dressing could drive local issues higher,” said AB Capital Securities analyst Abbygayle Estrella. RSI is a technical indicator that plots the current and historical strength or weakness of a stock or market based on the closing prices of a recent trading period. It is a tool to measure the velocity and magnitude of directional price movements.

AB Capital Securities sees the PSEi’s support at 6,580 and resistance at 6,760 or at the upper band of its uptrend. “We recommend investors to be selective on issues that provide greater upsides on their current levels,” Estrella said, adding that her firm was keen on Manila Water, Jollibee and Security Bank.

Banco de Oro Unibank chief strategist Jonathan Ravelas said that despite the minor profit-taking recently, the market would still have some room to retry the recent highs. “However, bear in mind that the market is ripe for a near-term correction. A much larger correction is at play once the 6,400 level has been broken,” Ravelas said.

He said the better-than-expected growth numbers and expectations of better fourth-quarter and full-year 2012 earnings continued to keep the market on the upbeat.

The PSEi last week marked a new intraday high finish at 6,667.41 on Thursday, the 20th record breakout for this year.

“Having crossed above the 6,600 zone, all eyes are set on the PSEi’s ability to trounce its next target, possibly 6,700-6,750. The general theme is still reliant on stimulus measures that will help boost growth, especially with the earnings reporting season in the coming weeks,” said Freya May Natividad, an analyst at 2TradeAsia.com.—Doris C. Dumlao

Sam Miguel
02-25-2013, 09:12 AM
Philippine stocks attract new foreign investors

Fund managers keen on PH firms

By Doris C. Dumlao

Philippine Daily Inquirer

2:51 am | Monday, February 25th, 2013

The Philippines, whose stock market has performed well in the last four years, is attracting a new batch of foreign institutional investors keen on including local equities in their portfolios for the first time, according to First Metro Securities Brokerage Corp.

FirstMetroSec recently brought Philippine-listed companies to this year’s Singapore leg of the Pulse of Asia Conference organized by DBSVickers Pte. Ltd. (DBSVickers) as part of the new research collaboration between the two institutions.

“The response from the regional fund managers, the Philippine companies we brought to the conference and our hosts was overwhelmingly positive. Roughly 80 percent of these institutional investors have not previously met the Philippine companies we brought and expressed strong interest in our market,” FirstMetroSec president Gonzalo Ordoñez said in a statement.

The three Philippine companies brought by FirstMetroSec to the investor briefings were property developer Robinsons Land Corp. (RLC), infrastructure holding firm Metro Pacific Investment Corp. (MPI) and retailer Puregold Price Club Inc. (PGOLD).

“The small group sessions of the Philippine companies were packed. There were no one-on-one meetings possible since all time slots were filled. The program was scheduled to start at 9 a.m. but RLC had to begin at 8 a.m. to accommodate all interested fund managers. A majority of MPI’s meetings were with fresh names, despite their long exposure in the region,” Ordoñez said.

“Several participants I spoke with particularly mentioned how interested they were in the prospects of Puregold, with one initially exclaiming ‘so it isn’t a mining stock!’ and breaking out in laughter. They cited the prospects of the consumer sector and Puregold’s interesting story in particular,” he said.

Ordoñez said the participants ranged from those who have invested in the Philippines for some time, trying to weigh the risks that could derail the Philippine growth story, to those who were just beginning to notice and were looking for fresh opportunities.

The conference was attended by 400 regional fund managers and 85 listed companies from Singapore, China, Hong Kong, South Korea, Malaysia, Indonesia and the Philippines.

The listed firms participated in a series of small group sessions with key institutional investors considering the Philippines. The sessions allowed each firm to present to 30-40 fund managers throughout the day and to closely interact with potential investors in a more private setting.

The conference, particularly the dialogues, also provided an international perspective to FirstMetroSec’s research coverage of these firms and the Philippine market.

FirstMetroSec and DBSVickers plan to continue inviting listed firms to future conferences in the United States and Europe as well as bring individual firms on separate road shows. They are keen on expanding joint distribution and working on new areas of collaboration.

Sam Miguel
02-26-2013, 08:29 AM
Stocks continue dizzying climb

Philippine Daily Inquirer

10:23 pm | Monday, February 25th, 2013

The local stocks index breached the 6,700-mark for the first time in history Monday as cash-awash investors continued to chase yields, driving equities valuations to dizzying heights.

The main-share Philippine Stock Exchange index gained 56.27 points or 0.84 percent to close at the day’s peak of 6,721.33. This marked the PSEi’s 21st record breakout for the year, making some stock dealers jittery about valuations.

All counters were up but the sharpest uptick was posted by the industrial (+1.68 percent) and services (+1.08 percent) counters.

“The market continues to remain strong, driven by continued flows domestically and overseas as evidenced by the pickup in value turnover last week versus the previous week. However, we recommend to buy on weakness as the market remains overbought,” said Conra do Bate, president of online stock brokerage COL Financial.

“Advise caution on this sharp rise. A correction may happen soon. Take profit and be on the sidelines in the meantime,” said Ramon Garcia, president of local stock brokerage RTG & Co.

Since the start of the year, the PSEi has gained a total of 908.60 points or 15.6 percent.

Meanwhile, risk appetite was buoyant across the region Monday. Japanese stocks led Asian equities higher.

At the local market, the biggest index gainers on Monday were Megaworld (+4.17 percent), Manila Water (+4.16 percent), RLC (+3.41 percent), AC (+3.33 percent), SMC (+2.5 percent), EDC (+2.43 percent), Philex (+2.27 percent), BDO (+2.27 percent), MPIC (+1.78 percent) and FGEN (+1.74 percent).

Value turnover amounted to P7.81 billion. There were twice as many gainers as there were decliners.

SMIC, the day’s most actively traded stock, gained by 0.7 percent to close at P1,024. This gave the Sys’ holding firm a market capitalization of P633.61 billion, making it the most valuable company in the stock market, dislodging PLDT’s P620 billion.

Meanwhile, the index laggers for the day were SMDC (-3.97 percent) and BPI (-3.07 percent). SM Prime, Semirara, DMCI also closed in negative territory. Doris C. Dumlao

Sam Miguel
02-26-2013, 08:36 AM
The bull market and the bull run

By Den Somera

Philippine Daily Inquirer

10:21 pm | Monday, February 25th, 2013

WHAT’S the difference between a bull market and a bull run? I don’t blame you if you find yourself struggling with these terminologies. With what has been happening in the market, this feeling of perplexity is understandable. I, myself, has been searching for the fine lines to define the difference and understand what exactly is happening.

It has been on a continuous uptrend since the start of the year. It is also climbing faster than before. It is now trading beyond previous levels, which means the market has been trading at higher price multiples, yet it continues to go higher. Contrary to expectations, the market has not shown signs of serious price corrections. Visible price corrections happen only within the trading day. Losses were also minimal.

The market’s close the week before last could have been an indicator of a pending correction. That week, the market’s advance was less than half of its performance in the previous two weeks. It posted a weekly gain of only 62.97 points or 0.97 percent, far below the gains in the previous two weeks of 150.97 points or 2.45 percent and 140.06 points or 2.22 percent. But last week, instead of slowing down to enter into a correction phase, the market did the opposite. It picked up momentum, eliminated the slack and ended higher with a weekly gain of 143.42 points or 2.2 percent.

What could be of significance were the trading results last Friday. The market posted a loss of 2.35 points or 0.04 percent from the previous day. It’s too small to be considered significant. But the deviation happened as the market went through a series of declining gains within the week, indicating two things happened. There was obviously a change of hands and transactions centered on big-cap stocks. As to whether this will lead to another sell-off that would, in turn, drive down prices, will depend on the kind of the buyers. It will not go down if they are taken in by the so-called “strong hands” or long-term buyers. Prices will go down if they are taken by the so-called “weak hands” otherwise known as short-term buyers or speculators.

Splitting hairs

Things look confusing. The market has been outpacing its previously established rates of advances at the same time breaking trading patterns. These developments leave people struggling with the question of whether what has been happening is a lesson that tells us there is a difference between a bull run and bull market.

According to references, there is no distinction between the two. A bull market necessarily brings along the state of a bull run or price run-up. A source describes these two terms as follows: “a bull market (or bull run) is one characterized by a significant and long-term growth in value in the stock market as shown by rising market indicators. In less technical terms, there are (simply) more buyers than sellers.” The concept of a bull run or bull market in the context of the business cycle represents the long-term patterns of expansion and contraction in the economy as witnessed by the flow from recession to recovery and back.”

As we understand it, a bull market is characterized by a sustained rise of share prices. As another reference explains it, “this occurs when investors believe the positive trend will continue for the long term.” Needless to say, the opposite of it is a bear market. But that is not the point at the moment. The question is, if there is a difference between a bull run and a bull market.

As I understand it, a bull run is a series of price movements. It is prolonged and characterized by daily gains.

A reference adds that if the daily price increases are sustained for at least five trading days, “the stock, sector or index could be said to be in a run.” And if the run is the result of rising prices, “it is called a rally, a bull rally. If prices are dropping, the run would be referred to as a bear market rally.”

Bottom line spin

A run of prices is the result of a large amount of money entering the market and bidding up stock prices like what is happening at the moment. Contributory to a bull run or bull market are fundamental factors, technical factors and market sentiments. As experienced, though, a bull market happens when the economy is strong, when more people have money and they are willing to spend it. When this happens, demand becomes stronger than supply; market prices go up. When sustained, we have a bull market.

This is what is happening at present. Buying sentiments are very strong. Because of this, sellers hold on to their shares for higher bids creating, in the process, a scarcity of supply, forcing buyers to buy higher.

In conclusion, the run of stock prices within this period is what is called a bull run. The time frame, at which such price run happens, is called the bull market.

This is not, however, the issue at present. The issue is if the market will continue with its bull run. To my mind, due to unfolding economic developments, the bull market has still a long way to go. The bull run of prices, however, may be determined by the distribution of money into the local economy and the stock market by both local and foreign investors.

Sam Miguel
02-26-2013, 09:09 AM
Exercise of stock options: Compensation or a fringe benefit?

TOP OF MIND

By Cecille A. Fernando

(The Philippine Star) | Updated February 26, 2013 - 12:00am

Just as the annualization of withholding tax is about to begin, the Commissioner of Internal Revenue (CIR) issued Revenue Memorandum Circular No. (RMC) 88-2012 dated December 27, 2012, to clarify the tax implications of income or gain from the exercise of stock option plans. In BIR Ruling No. 119-2012 dated February 22, 2012 it was ruled that any income or gain derived by an employee from the exercise of stock option is considered as additional compensation subject to income tax and consequently, to withholding tax on compensation (WTC). However, in RMC 88-2012, the CIR clarified that notwithstanding the aforementioned ruling in BIR Ruling No. 119-2012, any income or gain derived from stock option plans granted to managerial and supervisory employees which qualify as fringe benefits is subject to fringe benefits tax (FBT).

As worded, RMC 88-2012 can be taken to mean that income or gain derived by the employee for the exercise of stock option is subject to WTC; or to FBT, if the stock option qualifies as a fringe benefit. Unfortunately, the RMC does not provide guidelines or criteria for the classification of the gain from the exercise of stock option as fringe benefit or as compensation income.

Under Revenue Regulations No. 3-98, the term “FRINGE BENEFIT” means any good, service, or other benefit furnished or granted by an employer in cash or in kind, in addition to basic salaries, to an individual employee (except rank and file) such as, but not limited to the following:

1. Housing;

2. Expense account;

3. Vehicle of any kind;

4. Household personnel, such as maid, driver and others;

5. Interest on loan at less than market rate to the extent of the difference between the market rate and actual rate granted;

6. Membership fees, dues and other expenses borne by the employer for the employee in social and athletic clubs or other similar organizations;

7. Expenses for foreign travel;

8. Holiday and vacation expenses;

9. Educational assistance to the employee or his dependents; and

10. Life or health insurance and other non-life insurance premiums or similar amounts in excess of what the law allows.

Based on the above definition, the gain in the exercise of a stock option plan would qualify as a fringe benefit. Does it follow that the gain from the exercise of stock option of managerial and supervisory employees is subject to FBT, and not to withholding tax on compensation?

As illustrated below, whether the gain in the exercise of stock option is subject to FBT or to WTC, the same amount of taxes will be remitted to the Bureau of Internal Revenue (BIR).

1. Under a stock option plan where the employer will shoulder the taxes, the tax base for FBT and WTC would be the grossed up amount of the gain from the exercise of stock option; hence, the amount of tax that will be remitted to the BIR would be generally the same under the FBT or WTC scenario.

2. Under a stock option plan where the employer will not shoulder the taxes on the gain from the exercise of stock option, it can adopt a policy to include the tax cost (FBT or WTC) in the total stock option gain of the employee. Thus, the tax that will be remitted to the BIR will still be the same under either tax scenario.

From the standpoint of tax collection, there is thus no compelling reason to require taxpayers to treat the gain from the exercise of stock option as subject to FBT. As shown above, under the WTC or FBT regime, the BIR stands to collect the same amount of taxes.

RMC 88-2012 was supposedly issued to clarify the taxation of gain from the exercise of stock option. Unfortunately, it has instead created confusion among taxpayers. Some quarters fear that the RMC will be used as basis to assess deficiency FBT even against taxpayers reporting the gain on the exercise of stock option as compensation income subject to WTC. If the intention is to revoke BIR Ruling No. 119-2012 and to subject to FBT the gain from the exercise of stock option, so be it. But please make the pronouncement clear and unequivocal.

Cecille Fernando is an assistant manager from the tax group of Manabat Sanagustin & Co. (MS&Co.), the Philippine member firm of KPMG International.

This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity.

The view and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG International or MS&Co. For comments or inquiries, please email manila@kpmg.com or rgmanabat@kpmg.com.

Sam Miguel
03-04-2013, 11:20 AM
Cautious trading seen

Philippine Daily Inquirer

2:42 am | Monday, March 4th, 2013

Local stocks are seen trading with caution this week as investors reassess recent gains alongside jitters likely arising from recent woes of geothermal firm Energy Development Corp. and the conflict in Sabah.

Last week, the main-share Philippine Stock Exchange index shed 0.35 percent to close at 6,642.27, marking the first weekly loss in nine weeks.

“Chart-wise, the market appears to be consolidating near the highs, ranging from 6,600 to as high as the 6,725.36 levels,” said Banco de Oro Unibank chief strategist Jonathan Ravelas. “Clearly, the market momentum is stalling and that the market is indeed ripe for a much larger correction.”

Ravelas said a clear break below the 6,600 levels would put the 6,550-6,650 levels to a test.

Joseph Roxas, president of Eagle Equities, said the stock market might still continue to be weighed down by Lopez stocks.

Last Friday, index stocks Energy Development Corp. (EDC) and First Gen Corp. tumbled on news of the suspension of the Bacman geothermal plants due to a turbine disruption. Later in the afternoon after the market’s closing, there was a report that a landslide at EDC’s geothermal plant in Leyte killed five people while several others remained missing.

Freya May Natividad, an analyst at 2TradeAsia.com, said weak reactions in Western markets were seen this week, pending US regulators’ final call over the $85-billion across-the-board spending cut.—[I]Doris C. Dumlao

Joescoundrel
03-06-2013, 08:34 AM
Shares rebound today; focus on gaming stocks

(philstar.com) | Updated March 5, 2013 - 9:00pm

MANILA, Philippines (Xinhua) - The Philippine stock market rebounded today after investors found Monday's sell-off an opportunity to position on selected issues.

The bellwether Philippine Stock Exchange index jumped by 1.12 percent or 74.16 points to 6,711.72. The broader all-share index rose by 0.8 percent or 33.30 points to 4,205.37.

Trading volume reached 1.97 billion shares worth P12.66 billion ($311.01 million) with 84 stocks advancing, 70 declining, and 56 unchanged.

All six counters were up.

"The two-day retreat of the main index is a welcome respite from an almost unbridled run," analyst Justino Calaycay of Accord Capital Equities Corp. said.

The analyst said technical indicators are suggesting that the two-day drop has eased off the overbought level of the Philippine stock market, which will make certain issues even more inviting.

This, Calaycay said, is backed by the fact that the outlook to the local economy remains positive and returns on alternative assets remain low.

"Over the next two weeks, speculative trading, particularly on gaming stocks, may dominate investor interest. This should give fundamentalists the opportunity to hunt for bargains ahead of the release of the first quarter numbers and technicians some breathing room," Calaycay said.

After rallying by almost 8 percent on Monday, shares of Bloomberry Resorts Corp. dropped 3.73 percent of its value today.

Calaycay said investors are starting to pluck up its shares ahead of the March 16 opening of Solaire, reputed to be the biggest - if not the best - gaming facility in town, at par with its counterparts in Las Vegas.

BLOOM will also become part of the PSEI basket effective March 11, replacing SM Development Corp.

Stocks in the 30-company index were mostly up. These issues include Ayala Corp., heavyweight Philippine Long Distance Telephone Co. (PLDT), and Globe Telecom, Inc.

In other corporate news, PLDT officials said the company's reported net income in 2012 rose 12 percent on year to P35.5 billion ($870.74 million). These results reflect the consolidation of the operating performance of Digital Telecommunications Philippines, Inc. which PLDT acquired in October 2011.

Consolidated core net income, before exceptional items, however declined four percent on year to P37.3 billion ($914.89 million). This was due to higher operating expenses relating mainly to the manpower reduction programs at PLDT, Smart and Digitel and selling and promotions initiatives.

Overall consolidated service revenues for 2012 increased by 10 percent to P169.3 billion ($4.15 billion) on higher revenues brought by their wireless, fixed line and business process outsourcing divisions.

Sam Miguel
03-11-2013, 09:02 AM
Philippine stocks seen to rise further

Philippine Daily Inquirer

1:58 am | Monday, March 11th, 2013

Local stocks may attempt to test more record highs this week on the back of strong liquidity flows and upbeat overseas markets but some investors are praying for a bigger correction before increasing their position.

Last week, the Philippine Stock Exchange index (PSEi) resumed its upswing, gaining 191 points, or 2.88 percent, to close at 6,833.77. A new intraday peak was hit at 6,859.79 on Friday.

Analysts said among the key events to watch out for this week are the recomposition of the PSEi (which takes effect Monday), which will include Bloomberry Resorts Corp. in the roster, replacing SM Development Corp. Another is the March 14 policy-rate setting of the Bangko Sentral ng Pilipinas, during which the market keenly awaits a decision on whether

there will be a further reduction in the interest rates on special deposit accounts (SDAs).

“We think PSEi would go higher this week as liquidity remains abundant and corporate earnings are decent,” said Gregg Adrian Ilag, an analyst at AB Capital Securities.

He said the strategy would be to spot opportunities particularly on companies that benefit from the secular consumption growth, cheap funding costs, and infrastructure rollout. The analyst said the BSP would likely maintain key policy rates as inflation remains within the target range.

“Valuation multiples continue to be amplified by liquidity, triggering concerns over the PSEi’s ability in sustaining the unprecedented highs,” Ilag said, noting that as of Friday, the PSEi was trading at 19.6 times projected earnings for 2013. “However, earnings yield is at 5.09 percent, which is still higher than the bond yields. We think these falling bond yields are providing room for PSEi’s re-rating.”

From the technical standpoint, Ilag said sustaining rallies might prove to be difficult. Immediate resistance is seen at 6,900 and support at 6,800. “Chartwise, the market appears to be consolidating near the highs, ranging from 6,600 to as high as the 6,835.86 levels. Clearly, the market momentum is stalling and supports that the market is indeed ripe for a much larger correction,” said Banco de Oro Unibank Jonathan Ravelas.

A clear break below the 6,600 levels will put the 6,550-6,560 levels to a test, Ravelas said. “If broken we could see a test of the 6,400-6,500 levels. Failure to break below the 6,600 level will retest the 6,800 levels,” he said.

Freya May Natividad, an analyst at 2TradeAsia.com, said investors must seize any weakness to position on stocks with good dividend yields and growth stories. “Property is evolving within tourism and BPO (business process outsourcing) migration opportunities, while banks are gearing toward higher-margin micro-financing,” she said.—Doris C. Dumlao

Sam Miguel
03-12-2013, 08:16 AM
Stocks end lower

Philippine Daily Inquirer

9:01 pm | Monday, March 11th, 2013

The local stocks index soared to a new record intra-day high in early session but closed in negative territory Monday as lofty valuations tempted profit-taking.

The Philippine Stock Exchange index closed 19.82 points or 0.29-percent lower at 6,813.95. This was after hitting a new record intra-day peak of 6,867.10 as an improved US jobs data lifted most stock markets in the region.

Dealers said the market was ripe for a correction after a strong performance since the start of the year.

Trading was mixed across counters: the industrial, financial and holding firms declined while the services, mining and oil and property counters gained.

On Monday, the PSEi recomposition took effect, with Bloomberry Resorts (+1.96 percent) joining the roster and SM Development Corp. (-2.36 percent) dropping out.

The index was battered by a last-minute selldown by a big institutional investor on Aboitiz Power (-7.27 percent) and SMC (-5.74 percent), dealers said. SMIC, Megaworld, Metrobank, AEV, MPI, MWC, BDO, PLDT, Meralco and Ayala also contributed to the decline.

Asked whether institutional investors might be starting to bring back funds to the US, where stocks are reaching record highs, Asiasec Equities Inc. chief strategist Manny Cruz said this was not yet the case. “It’s a possibility but usually throughout the bull run, they just park their money in fixed income. It’s a different story when they pull out the funds.”

Cruz said that in the case of Indonesia, some funds pulled out after the sovereign obtained an investment grade rating but eventually faced some problems in the banking system.

In the case of the Philippines, Cruz said the market needed some space to correct.

Cruz said the PSEi might pull back to as low as 6,400 to allow the market to establish a stronger base. Doris C. Dumlao

Sam Miguel
03-13-2013, 09:09 AM
The new highs

By Den Somera

8:56 pm | Monday, March 11th, 2013

The market is unstoppable. After a slight pullback the other week— the first this year— it resumed its rally with a weekly gain of 191.50 points, equivalent to 2.88 percent, from the previous week as it closed last Friday at 6,833.77.

This market close is 1.44 points away from the new all-time high posted on Wednesday at 6,835.21. It is also 26.02 points lower than the new all-time session high of 6,859.79 posted last Friday, too. This performance of the market appears to have been motivated by developments on Wall Street last week, pointing to more signs of the improving state of the U.S. economy.

Tempting but dreadful

The market’s new highs can be described as tempting but dreadful, or dreadful but tempting. Either way, both ideas connote big danger but possibly great reward for those who would dare to tread on it.

Entering a position on Trans-Asia Oil and Development Corp. (TA) before the rights offering of the company in November to raise funds for its expansion was one example. Its shares then traded in small volume at P1.08 to P1.20 per share. The offer price was P1.00 per share with the rights issue offered at one for every two shares held.

TA’s stock price adjusted to the impact of the rights issue that it, thereafter, traded lower. This went on all the way up to the end of December.

A day after the market opened this for the year on Jan. 3—and after rumors that a group of market makers took a significant position in the rights issue—TA’s stock price started to trade higher and the volume got bigger.

A good number of those who came in at that point then sold out in the next 20 days when the share price of TA hit P1.45 or thereabout. The profit of almost 30 percent was more than anybody would have imagined to have in such a short period considering how stock prices, in general, have performed in the past.

The sell-off culminated on Jan. 29 when new—and obviously more daring—hands seemed to have absorbed the day’s extraordinary volume of 130.83 million shares. This led to another price run-up that drove up the market price of TA in the next week or so to P1.88 per share.

Those who held on and sold at this price would have realized a gain of about 65 percent. And those who may have bought at P1.40 to P1.45 would have realized as much as 30 percent, which was just as much as what was realized by those who took advantage of the rights offering and sold at the first sell-off at P1.45 per share.

On Feb. 5, the transaction volume started to fall that in the following week, the share price of TA fell by 7 percent to P1.75 a piece.

On Feb. 18, the volume of transaction again rose dramatically that TA’s share price traded higher toward P2.00 per share. In between minor sell-offs and change of hands from weaker (shorter term) to stronger hands (longer term), the share price of TA reached P2.11 per share by the end of February.

As of last Friday, the share price of TA had hit the 52-week high of P2.72 and closed for the week at P2.59 per share.

Since January, the price of TA has gone up by as much as 127.19 percent. TA’s price climb last week, however, was almost 90 degrees.

Bottom line spin

TA stocks prices had a parallel and similarly colorful run as that of the market, in general. The market has risen too fast and too high in so short a time. In barely nine weeks of trading since the start of the year, it has chalked up a total of 1,021.04 points that, as of last Friday, it was less than 9 percent away from the 12-month performance forecast of 7,500 for 2013.

This is made possible by the seemingly unimaginable feat of the market of being able to absorb big sell-offs and post new highs at the same time.

Like in TA’s rise to stardom, despite technical indicators suggesting that TA shares are overbought, the market managed to continue with its extraordinary advance.

One obvious reason is the presence of more buying money in the market. This has created the dramatic situation where more money is now chasing lesser volume of shares of stocks available for sale.

In last week’s trading, the volume amounted to only 13.77 billion shares compared to the previous week of 17.18 billion shares. More than that, value turnover was bigger at P73.13 billion compared to P58.23 billion the week before.

Factoring the impact of the total foreign buying transactions for the week—being 50 percent more than selling—the market rose by another 191.5 points equivalent to 2.88 percent from the previous week’s level.

The market continued to trade on first line stocks, plucking them at their already technically overbought levels while posting new record highs.

Thus, like in the case of TA, despite its steep share price climb over the same short period of time, it continues to trade actively as its present valuation remains attractive given the potential earnings it stands to earn based on disclosed expansion activities.

How do we, therefore, manage the present situation? Do we jump into a buying spree or take it easy? We are now at new highs not seen before the last bull run in 2007.

Some argue that the current market run is a sucker’s rally that the obvious answer is to take a more defensive approach. “Some speed bumps” are just around the corner, so they say.

One defensive stance is lightening up one’s exposure in the market now. It could prove prudent as the bulk of corporate earnings reports for last year are yet to come out. A disappointing report will surely create a pullback.

In the face of making a mistake, the strategy I’d pick is to sell stocks like TA and the rest of those that had made sharp gains. At the same time, be on the lookout for bargain stocks that has been covered by the dust of the current market scramble, for I still believe that any downturn the market will make now is only a technical pullback or correction considering the brightening economic landscape here and abroad.

New PSEi

If you missed this news, the bourse’s benchmark index has a new composition. It took effect yesterday, March 11.

Bloomberry Resorts Corp. (BLOOM) is replacing SM Development Corp. (SMDC) in the roster of 30 most liquid and highly capitalized stocks of the bourse. This comes as a result of the review of trading activities from January to December 2012, which is in line with the exchange’s policy to “offer independent and transparent benchmark indices that investors can use as tool for measuring the market’s performance.”

The last change in the PSEi’s indices was made on Sept. 20, 2012.

Sam Miguel
03-14-2013, 02:08 PM
Local stock index seen hitting 7,400 this year

By Doris C. Dumlao

Philippine Daily Inquirer

3:55 pm | Tuesday, March 12th, 2013

MANILA, Philippines—The Philippine Stock Exchange index may hit the 7,300 to 7,400 level this year as the Philippines attains investment-grade credit rating and further liquidity is released from special deposit account (SDA) rate cuts, investment bank First Metro Investment Corp. said Tuesday.

During the Philippine Investment Forum organized by Euromoney forum on Tuesday, FMIC president Roberto Juanchito Dispo said the main stock index would have more room to rise but moving forward, the challenge would be how to attract new issues. This would allow the market to deepen “so that people will have more choices” to invest in.

FMIC’s new outlook of at least 7,300 for the main index is an upgrade from the forecast of 6,800 only last January. Back then, Dispo said the investment bank had yet to fully factor in an investment grade rating for the Philippines. “But now, an upgrade is more certain,” he told reporters.

The Philippine government’s debt is currently rated at one notch below the much-coveted investment grade by Standard & Poor’s and two notches below by Moody’s and Fitch.

“The monetary easing by BSP is also going to drive the index higher because funds released from SDA or at least portion of it will now go to riskier assets because they will continue to look for yields,” Dispo said.

He said FMIC had likewise upgraded its projected increase in corporate earnings to 18-19 percent from its earlier growth outlook of only 15 percent. “Low interest rates will be supportive of corporate earnings,” he said.

At FMIC’s revised forecast of 7,300 for the index, Dispo said this would translate to a price to earnings (P/E) multiple of 24 times to 25 times from around 19-20 times at present. Although this was now at the high end of the historical range, Dispo said corporate earnings were still growing on the back of a favorable macroeconomic environment.

Based on its 2013 economic outlook, FMIC expects heavy election spending, increased infrastructure projects, robust consumer and service sectors and stronger tourism and gaming are seen supporting a gross domestic product (GDP) growth of above 7.5 percent this year, much higher than the country’s trend growth of below 5 percent prior to the last Presidential elections in 2010.

Sam Miguel
03-15-2013, 08:45 AM
PH stocks nosedive on ‘sell’ rating

Philippine Daily Inquirer

3:14 am | Friday, March 15th, 2013

Share prices on Thursday took a nosedive as fund managers issued a “sell” rating on Philippine stocks, now considered among the most expensive in the world.

The main index fell by as much as 129 points before recovering to close at 6,694.71 points, down 81.85 points, or 1.21 percent.

The broader all-shares index was down 0.73 percent. Among the subindices, services lost the most, shedding 2.04 percent. Industrials was the only counter that gained by a mere 0.01 percent.

The sell-off for the fourth straight day came as more institutional investors booked profits from previous rallies that pushed the main index to record highs several times this year.

“The latest was HSBC,” said one fund manager, referring to investment houses that have put “sell” ratings on Philippine stocks.

Shares of conglomerate Ayala Corp. were the most traded. The stock lost 1.61 percent. SM Investments Corp. and Philippine Long Distance Telephone Co. were also big losers, shedding 2.09 percent and 3.64 percent, respectively.

But Universal Robina Corp. bucked the trend, gaining 4.92 percent.—Paolo Montecillo

Sam Miguel
03-15-2013, 08:47 AM
Avoiding the relisting prohibition

By Francis Lim

Philippine Daily Inquirer

5:57 am | Thursday, March 14th, 2013

In a recent column, I discussed the tax and non-tax consequences arising from delisting publicly listed companies for non-compliance with the 10 percent minimum public ownership (MPO) rules of the Philippine Stock Exchange (PSE).

As you may remember, a striking non-tax consequence is the five-year prohibition on the company from relisting in the PSE.

To recap, the MPO rules provide that a publicly listed company whose shares are now under trading suspension for non-compliance with the MPO requirement by Dec. 31, 2012, have six months, or until June 30, 2013, to comply with the 10 percent requirement. If the company does not comply by that time, it will be automatically delisted from the PSE.

While this “automatic delisting” is akin to involuntary delisting under the PSE rules, the MPO rules explicitly provide that for purposes of the automatic delisting of shares of the noncompliant company, the Involuntary Delisting rules of the PSE shall not apply. However, the MPO rules expressly state that the five-year Relisting Prohibition under the Involuntary Delisting rules shall apply.

The Relisting Prohibition under the PSE rules has two parts. The first part provides that a company that is involuntarily delisted from the PSE cannot apply for relisting within a period of five years from the time it was delisted. This consequence is pretty straightforward and does not need further discussion.

What I previously said may be problematic is the second sentence of the Relisting Prohibition, which states that the directors and executive officers of the company are “disqualified from becoming directors or executive officers of any company applying for listing” within the same five-year period. Note that the rule uses the term “any listing” without making any distinction; listing, however, can be of many types, such as IPO listing, secondary listing, follow-on listing, top-up listing, etc.

Moreover, the definition of “listing” in the PSE listing rules is broadly stated and refers to “the admission of securities for trading and the inclusion in the official registry in the Exchange.”

Most importantly, the rationale for the disqualification of the directors and executive officers is that they are (and should be) responsible for their company’s failure to comply with a basic requirement of the PSE to remain as a listed company. This, in turn, would cause damage and prejudice to the shareholders who are deprived of the benefits of listing, which include a transparent structure and governance for their company and the tax perks for selling and buying shares of the company.

Considering the rationale for the disqualification and the broad wording of the rule, one can justifiably argue that the directors and executive officers of the delisted cannot sit as such in any other publicly listed company. Verba legis and anima legis, so to speak.

Now, the question is: What can be done?

Delisting, under the PSE rules, is of two types: voluntary and involuntary.

The MPO rules appear to recognize voluntary delisting as an option for companies that fail to comply with the 10 percent MPO requirement rather than be automatically delisted.

In fact, a number of companies availed themselves of this remedy before the automatic trading suspension took effect after Dec. 31, 2012, deadline.

The inclusion of this option appears to be the light at the end of the tunnel for companies that are in danger of being automatically delisted. Of course, this has to be done before the June 30, 2013, deadline. While voluntary delisting may entail time and cost for the subject company as the PSE requires the conduct of a tender offer, it will help ensure that the Relisting Prohibition shall not apply and the subject company may thereafter apply for a new listing even before the lapse of five years from the time it was delisted. More importantly, the directors and executive officers of such company may be able to sit as such in other companies applying for any listing (whether in the broad sense or not) within the five-year period.

This is how the PSE currently interprets its rules. Hopefully, the SEC and minority shareholders who feel aggrieved by the delisting of their companies will not question such interpretation.

Sam Miguel
03-18-2013, 09:40 AM
PH stock consolidation seen to continue

Philippine Daily Inquirer

2:18 am | Monday, March 18th, 2013

Local stocks are seen to consolidate this week after the profit-taking seen in the previous week.

The main-share Philippine Stock Exchange index slumped 2.62 percent last week to finish at 6,654.66 on Friday.

Banco de Oro Unibank chief strategist Jonathan Ravelas said the market posted its second straight week of decline as investors capitalized on recent gains ahead of the Holy Week.

“Chartwise, the week’s close at 6,654.60 continues to highlight that a near-term correction is in the works,” Ravelas said. “A further break below the 6,650 levels will put the 6,000-6,250 levels at risk.”

But if the 6,650 level would hold, Ravelas said the market would likely retest the 6,800 levels.

Freya May Natividad, an analyst at 2TradeAsia.com, said Standard & Poor’s warning of possible capital reversal in case advanced economies signal solid economic recovery dented sentiment last week.

She said local barometers might go on “stabilization mode” in the coming weeks following the latest correction. This pattern should be maintained within the 6,600-6,650 range to support the PSEi’s ascending channel, she said.

If the 6,600 immediate support would be broken, some traders might reassess their views on market trend.

Natividad said it would be best to trade within a range and spot for large-cap followers or the so-called second-liners that have good leads to unlock, such as those in mining/oil, financial, infrastructure and utilities counters.

Resistance is seen at 6,700 to 6,750.—Doris C. Dumlao

Sam Miguel
03-18-2013, 10:30 AM
How sustainable is our good news?

DEMAND AND SUPPLY

By Boo Chanco

(The Philippine Star) | Updated March 18, 2013 - 12:00am

People are coming around to believe that something good is happening in our country, somehow. But people know better than to jump up with joy. There is this fear within us it could all be a dream… a mirage and reality will sooner than later bring us back down to earth.

The stock market is seemingly unstoppable. It corrects for a day or two but it soon resumes its upward trajectory. I am sure my good friend, John Mangun, a stock market guru and columnist gets asked the same question all the time. In his latest column, he gave this testy response: “Of course, the stock market is in a bubble. So what?”

John went on to write that “one experienced trader, Oliver, said this to me: ‘I might be buying a bubble but I want to be in for the ride.’ That is sensible investing… Forget the bubble. Enjoy the ride until it ends.”

So now the question is… when will it end? If you ask the stock market analysts they will say the end is not yet in sight… it is not too late to still enter the market.

The analysts are probably right. But I seriously wonder how sustainable this good news about our market and about all the positive sentiment we are getting about our economy. Not only do I worry about our propensity to shoot ourselves at the foot at the most hopeful time (Sabah?), there is also this surrealistic quality to our good news today.

First of all, it seems the good news is all tied up to one person — P-Noy. Secondly, it is also tied up to our strong consumer market fueled by OFW remittances. Neither of these two factors gives me comfort about sustainability.

I have read a lot of the very positive reviews we have been getting lately and it seems to me that most, if not all, are premised on P-Noy and his Daang Matuwid. I get the impression that the foreign analysts can’t get enough from the novelty of having a Filipino President who is actually honest.

The analysts ignore the fact that trying to bring that honesty down to the rest of government is a tough job. I don’t see good governance really kicking in any time soon. Just look at the continued failure of Customs to curb smuggling. Or what looks like PNP involvement in jueteng that resulted in the Atimonan massacre.

I worry that our good news is being tied to one man who is also just human. He may slip in the bathroom one day and hit his head hard in the cement tiles before his term is over and where will we be? Will the analysts start issuing new reviews that say they are putting their euphoric prognosis of our future on hold because P-Noy is no longer there to pursue his Daang Matuwid?

Take a close look at what the analysts are saying and you will notice that they are only ready to be bullish up to 2016. Some of them say they hope the successor will continue to pursue P-Noy’s Daang Matuwid. That’s a diplomatic way of saying they may change their minds.

More seriously, some analysts say off the record that they do not see a successor in the horizon with the same good governance credentials as P-Noy. Neither could I, in all honesty.

If the political pundits are to be believed, the next President will either be Jojo Binay, Bong Revilla or BongBong Marcos. I know… the thought is enough for those still young enough to have a future to make a beeline for an immigrant’s visa in some foreign safe haven.

If our choices are just those three, I am inclined to go with Jojo not just because he is a UP Prep alumnus as I am but because he has proven himself well in the area of governing with efficiency and producing good results. Is there a chance Jojo could be a good President?

I recently asked a friend that question because he has had a good exposure to Jojo in recent times. Even if we assume for argument’s sake that all the rumors about Jojo’s condo units and other city hall activities are true (not to say they are), is Jojo willing to turn his back on everything and just dedicate the last chapter of his life to pure and simple legacy building for his name and the country’s good?

The very honest answer I got was “I don’t know”. It was explained that the system is so bad that even with the best of intentions anyone who gets political power becomes a captive of the system. There are political debts to pay. Power also begets the desire for more power. Amassing power and wealth is a primal urge that only the most unworldly of monks can resist.

The fact that Jojo the former MABINI human rights lawyer aligned himself with Erap and Enrile, two of the most visible symbols of what is wrong with Philippine politics MABINI lawyers fought in the old days should give a good indication of Jojo’s political instincts. But couldn’t Jojo after he is elected President, renege on political alliances that’s necessary to win power for the greater good of the country? It could happen… miracles do happen.

The other reason why I worry about the sustainability of our good news is the dependence of the economy on OFW remittances. The positive sentiment of investors is grounded on the very large consumer buying power we have, thanks to OFW remittances.

But as many economists have pointed out, this bit of good news, thanks to our hardworking countrymen abroad, may also bring serious problems to our economy. They warn about the dangers of the Dutch disease. Even now, the strong inflow of dollars is making the peso too strong for the good of local industries. It is destroying what little competitiveness we have in the global market.

So, how sustainable is our good news? The best answer is… who really knows for sure! Our good news is largely based on sentiment and sentiment can be fleeting.

Positive sentiment could vanish even within P-Noy’s watch if it is clear his infra projects such as airports to bring in the tourists and roads to facilitate business growth are stalled. Daang Matuwid driving the good news has a shorter shelf life than the remaining years of P-Noy’s term.

Until we are able to repair our economy to produce enough domestic jobs to drastically cut the number of unemployed and underemployed, any economic growth we see remains meaningless to most Filipinos… and as such, unsustainable.

In the short term, take the advice of John Mangun and just ride with the positive sentiment. Making a few bucks now shouldn’t stop us from doing what we can to make the good news about our country finally sustainable. But always be very careful not to bet your last peso because the positive sentiment can turn bad without even a moment’s notice.

Smart’s LTE

Technology, if it works, can be really great. I found this out again the other weekend. I was on my way to Tagaytay when my editor texted to say that my deadline was being advanced by a day.

That should normally not be a problem but this time, I was not sure. I brought my i-pad but I haven’t tried writing a column from scratch using it.

And what about an internet connection? I don’t like working in internet cafes or even business centers. I want to work in the quiet privacy of my room.

Then it occurred to me as I looked at my new Smart i-Phone 5 that I was getting top-of-the-line LTE signal. I am not enough of a tekkie to know the full potential of my i-Phone but my associate Rosan Cruz once taught me how to use my i-Phone as a private hotspot.

I fixed the settings on my i-Phone, did the same for my i-Pad so it can access the Smart LTE via the i-Phone, got my visiting daughter to set up the Bluetooth connection of my i-Pad to the keyboard she gave me for Christmas and I was all set to meet my advanced deadline.

I worked for a couple of hours and e-mailed the finished column to my editor over 12 hours before the advanced deadline. I love technology when it works. I am also happy I shifted mobile broadband provider… and it is not even costing me more than my old one… same unli rate.

Celibacy

Jay Leno: “The ex-Pope said that at age 85 he cannot physically go on. Meanwhile, Hugh Hefner is going to be 87 and he just married a 26-year-old.

“So much for that celibate lifestyle!”

Sam Miguel
03-18-2013, 10:31 AM
PSE income up 54% amid robust mart

By Neil Jerome C. Morales

(The Philippine Star) | Updated March 18, 2013 - 12:00am

MANILA, Philippines - Robust activity in the equity market allowed profits of the Philippine Stock Exchange (PSE) to surge last year.

The operator of the country’s only stock exchange said its net income climbed 53.7 percent to P624.17 million from P406.19 million in 2011.

“The favorable macro environment and several game-changing PSE initiatives we’ve managed to implement combined to kick-start and sustain the market’s stirring run,” said PSE president and CEO Hans B. Sicat.

PSE recorded a 27 percent growth in its operating revenues to P1.14 billion last year from P900.76 million in the previous year.

Total revenues, which include income from investments, spiked 30 percent to P1.31 billion.

“The increase was mainly attributed to the growth in listing-related and trading-related incomes, as well as service fees,” PSE said.

Listing-related income rose nearly a third to P562.04 million from the P429.29 million in 2011 due to the rise in capital-raising activities of listed companies.

Capital raised at the Philippine stock market reached a record amount of P219.07 billion in 2012, more than double the P107.50 billion a year ago.

Capital raising activities include initial public offerings, follow-on offerings, stock rights offerings, and private placements.

“Trading activity also experienced an upsurge as average daily turnover went up by 27.1 percent to P7.26 billion in 2012, providing a significant boost to trading-related revenues and fees,” PSE said.

Trading-related revenues and fees grew 20.3 percent to P243.96 million, with higher trading volume benefiting the service fees generated by the PSE subsidiary Securities Clearing Corp. of the Philippines. Its income hit P316.38 million, up 24.5 percent from P254.03 million in 2011.

Operating expenses grew at a slower pace, gaining 14.6 percent to P505.13 million largely due to increases in professional fees, manpower cost, and depreciation and maintenance costs of the newly installed trading system.

The benchmark PSE index, which recorded 38 all-time highs on its way to growing by 33 percent and closing at 5,812.83 last year, was the second best performing benchmark index in Asia, next only to the 36.3 percent climb of Thailand’s SET index.

“The PSE’s exceptional corporate performance is another reflection of investors’ vote of confidence in our market,” Sicat said.

“If the first few months of 2013 are any indication, we are optimistic that this growth momentum can be sustained going forward,” Sicat added.

Sam Miguel
03-19-2013, 12:59 PM
Stocks fall for 6th straight session

Philippine Daily Inquirer

8:42 pm | Monday, March 18th, 2013

Local stocks saw a bloodbath for the sixth straight session Monday, dragging down the main index back to the 6,500 level as fresh jitters in the euro zone shook up regional markets.

The main-share Philippine Stock Exchange index tumbled 118.42 points or 1.78 percent to close at 6,536.18. The index has so far pulled back by 330.92 points or 4.8 percent from its recent all-time high of 6,867.10 points.

This developed as a peculiar bailout proposal for Cyprus revived concerns on the euro zone. European finance ministers wanted Cyprus’ depositors to give up 9.9 percent of their deposits in exchange for a 10-billion euro aid package. It is the first time in this fiscal contagion that savers were asked to shoulder part of the bailout out and investors feared this could be a dangerous precedent.

A pause in Wall Street’s 10-day winning streak also intensified risk-aversion across the region.

All counters were in the red but the most battered were the property (-2.88 percent) and holding firm (-2.81 percent) counters. Value turnover amounted to P9.77 billion. There were four times as many decliners (136) as there were gainers (34).

“With today’s breakdown of 6,650 levels, the drop accelerated, highlighting more weakness ahead toward 6,000-6250,” said Jonathan Ravelas, chief strategist at Banco de Oro Unibank.

Ravelas said it would be good to re-enter the market at around 6,200 just in time for the first-quarter earnings stream. “At the moment, (there’s) no news to spark rally,” he said.

Investors sold down shares of BDO, Ayala Corp., Ayala Land, PLDT, URC, SM Investments, Megaworld, Alliance Global, Energy Development Corp., Bloomberry, Petron, SM Prime, JG Summit, DMCI, Metro Pacific Investments and Meralco. Second-liners GT Capital, Vista Land and Puregold

likewise succumbed to profit-taking.

One of the few that bucked the day’s downturn was Metrobank, which rose 1.65 percent in heavy volume after the bank announced a 30-percent stock dividend to form part of a P50-billion increase in authorized capital.

“PSE index stocks can continue to consolidate. It’s going to be a stock picker’s game for the next few days,” said First Metro Asset Management Inc. president Gus Cosio. Doris C. Dumlao

Sam Miguel
03-20-2013, 08:29 AM
Stocks continue to decline

Philippine Daily Inquirer

11:00 pm | Tuesday, March 19th, 2013

Local stocks retreated for the seventh straight session on Tuesday, dragging the main index below 6,500, as investors reassessed the market’s recent gains.

The main-share Philippine Stock Exchange index slumped by 109.93 points or 1.68 percent to close at 6,426.25. This was even after most markets in the region rebounded after the previous day’s scare over a depositor levy proposed as part of a Cyprus bailout.

All counters ended in the red. There were nearly twice as many decliners (104) as there were gainers (59). Value turnover amounted to P10.94 billion.

Dealers said this correction was needed to build a stronger base to sustain the market’s uptrend especially as local equities have become very expensive relative to historical and regional valuations.

The main index has now given up 440.85 points or 6.4 percent since hitting the peak of 6,867.10 on March 11.

Investors sold down shares of BDO, SM Investments, Ayala Land, Metrobank, PLDT, Alliance Global, Ayala Corp., Megaworld, URC, Bloomberry, BPI, SM Prime, Meralco, Metro Pacific Investments, Petron, JG Summit and ICTSI.

Among those that bucked the day’s downturn were Meralco and second-liner Puregold. Doris C. Dumlao

Sam Miguel
03-20-2013, 08:31 AM
Should I sell all my stocks now?

By Henry Ong

Philippine Daily Inquirer

10:52 pm | Tuesday, March 19th, 2013

Q: The stock market has started to move sideways last week after registering an all-time high at 6,800 points recently. I wonder if this is a good time to take profits now as many stocks are already expensive, but I also worry that I might regret it later if the market resumes its uptrend and goes up further. I want to maximize my profits from stocks. Can you advise me? – Evan De Vera by e-mail

A: The reason you hesitate to sell your stocks now is you have the feeling of greed that comes with the anticipation that the market will further go up. The feeling of greed tells you to hold on to your stocks and wait for it to go higher as everyone expects the stock market to break the 7,000 target soon. There is a feeling of denial within you every time you see the market falling because you don’t want to hurt your ego by accepting the possibility that you may be wrong about your expectations.

Yes, there is no doubt that the market will go up again and possibly set another record high but every time the market goes up, the risk of losing also gets bigger. Considering the rocket speed and steep rise of the PSE index, which rose by 18 percent in less than three months, it is not hard to see that the stock market may soon be due for massive correction.

It may not necessarily be a sharp fall unless there is a reason for the market to panic but it may decline slowly on choppy fashion. Speculators will trade less as buying slows down. Traders take a back seat and assess where the market stands fundamentally. Some may fear that the market has topped already. Others think that since the Philippine stock market is already trading at scary valuations, many stocks are now ripe for the harvest.

This may be the best time for you to cash in on your gains while the opportunity to sell at a good price is still there. You may have missed out selling it at the highest price but at least you will be able to sell it at a nice profit before it is too late. You will never know where the market will go next. It may recover soon or stay sluggish for some time. When you sell it now, you can have that peace of mind that you can always buy it back later when it falls further.

If you are holding on to shares that are still trading at paper loss, you can sell it at best price possible. It doesn’t have to go above your cost. If you think that the stock has nothing good to offer and it is not going anywhere amidst the bullish market environment, then make a decision to cut your losses and minimize the damage.

As a rule of thumb, cut your losses when your investment has already lost 7 to 8 percent from your purchase price. If you cut your losses at 15 percent, you will need the stock to recover by 18% to break even. If you sell your stock at 50 percent loss, you will need the stock to recover by 100 percent just to break even.

There are growing risks that indicate that the market may be on its way to correct soon. Because of so much money that is flowing into the market brought about by lower interest rates, investing in Philippine stocks has been more of liquidity driven rather than fundamentals driven. The excess liquidity in the system has been propelling the market to euphoric levels. Market players have turned into speculators from investors. When people start to ignore high P/E valuations and buy up stocks like crazy, trouble is not far behind. Sooner or later, this market bubble is going to burst and many people will be rushing to get out of the market.

As we approach the end of the first quarter, it will be interesting to see how the quarterly earnings results will turn out next month. A quick sampling of the top index stocks with at least 20x P/E and above shows that the average expected earnings growth rate this year is 23 percent. Will the first quarter earnings results align with market expectations? That is something to watch out for. If the results turn out to be disappointing, then expect the market to fall. Share prices will be falling until market adjusts to a lower P/E target.

Another risk to look out for is inflation. Declining inflation from 4.6 percent in 2011 to 3.1 percent last year helped push stock prices up. The low inflation environment is a key factor that makes the market willing to pay a premium for market P/E because there is a perception of quality in earnings growth. The growth that is not artificially caused by inflation, because it is low but by real demand.

In February, the inflation rate has started to pick up and rose to 3.4 percent, the fastest in four months. Although this is still low by any comparison, there is a probability that this trend will carry on. With so much money circulating in the system, increased consumer spending that will support our growing economy this year will likely drive inflation higher. Also, we have the forthcoming national elections when a lot of money will change hands. When inflation increases, the premium on market P/E declines.

Sell now while it feels good. Look for the opportunity to sell your stocks at a good price. Selling on strength every time the market makes rally is a good strategy to get out.

Sam Miguel
03-20-2013, 08:34 AM
Bloomberg chief says PH in an ‘enviable position’

By Daxim L. Lucas

Philippine Daily Inquirer

10:56 pm | Tuesday, March 19th, 2013

The Philippines’ growing momentum in economic growth is due to a large degree to the Aquino administration, whose policies have given local and foreign businessmen fresh impetus to invest in the country, according to the head of one of the world’s biggest and most influential financial news organization.

Bloomberg L.P. chair Peter Grauer said the Philippines was in an “enviable position” vis-a-vis other countries around the world that lacked leadership at a time of great economic uncertainty.

“But I think leadership is a key differentiator and the [Philippines] today has quite a strong leadership,” he said in an interview with the Inquirer. “This will allow [the country] to move forward in a very thoughtful and solid pace of growth.”

The New York-based chief of Bloomberg —whose computer terminals are described as the gold standard of financial market news and analytics—visited the country on Monday and Tuesday to meet with government officials and business leaders amid the Philippines’ rising prominence in the international investment scene.

“I talk a fair amount about the leadership vacuum that exists in a lot of countries around the world,” Grauer said, when asked about what makes the Philippines attractive to the foreign business community. “And I think you are in a very enviable position to have a President who is focused on driving the country forward, creating transparency in the markets and building the economy with a solid and sustainable foundation.”

Bloomberg is a 15,000-member organization (which includes 2,300 news personnel in various media platforms) and has 172 bureaus in 72 countries. Its Bloomberg terminals —leased for approximately $1,700 a month per unit—is used by 310,000 subscribers in 174 countries.

Grauer noted that a significant part of Bloomberg’s revenue growth in recent years has been occurring in Asia as both the United States and Europe struggle with their economic difficulties. And within Asia, he said the Philippines was particularly promising.

“The economies are bumping along at zero or very little growth [in other advanced economies],” he said. “It’s much more fun here. It manifests itself. People walk with a little more spring in their step. It’s very intangible, but you see it and you feel it.”

In general, the growth of Bloomberg’s business in the Asean region—at an average 14 percent in 2012 for Indonesia, Malaysia, Philippines and Singapore—has outstripped the financial service organization’s global average growth rate of 0.5 percent. Grauer said he believed that the growth rate reflected the actual and potential expansion of the local economy as well.

“It’s matter of sustaining [the growth] and that’s a function of the quality of the leadership that you have,” the Bloomberg chief said when asked about challenges facing the Philippines going forward. “You seem to be in a very good position today, with a President who is leading the country in the right direction. And that’s not always the case in other countries.”

Apart from growing Bloomberg’s footprint in the Philippines, Grauer said his organization was also interested in helping the country’s capital markets mature and grow further.

In particular, he said Bloomberg was working toward providing more “localized” services that would help clients value government and corporate bonds more accurately on the Bloomberg system; developing a system to facilitate the trading of interest rate swaps, as well as partnering with the local bourse to develop exchange-traded funds, futures and options.

“A lot of these things take time to develop, but we think that the Philippines will be a very attractive market for us, going forward,” Grauer said. “We want to be partners with both the local market participants and regulators and other players like the finance ministry and the central bank.”

Sam Miguel
03-21-2013, 10:08 AM
‘Stock market rally sustainable’

By Riza Mantaring

2:17 am | Monday, March 18th, 2013

“Can we still invest?”

That’s a question you often hear these days. The stock market has been on an extended run-up, reaching new highs almost every other day this year.

Not even the most optimistic forecast I heard last year predicted the stellar performance we’ve seen so far! And warnings are now being issued that the market is overvalued.

But yes, while we expect a healthy correction, there are three reasons why we believe this rally is sustainable:

Liquidity. There is just too much money in the system. Domestic liquidity alone would be enough to push the market to all-time highs; this is further exacerbated by foreign money pouring in as the west struggles with weakened economies.

Robust earnings growth. The premium prices seen now are very well supported by the strong earnings growth of the listed companies. Earnings were up more than 15 percent in 2012, led by the banking sector.

With a domestically driven economy and a GDP growth forecast of between 6-7 percent, this strong earnings growth is expected to continue.

Strong political mandate. The changes the government has been making are structural in nature, and set the stage for more lasting economic growth. Efforts to root out corruption and improve transparency and governance at all levels have been particularly well received.

Credit rating

How long can this last?

The much-awaited credit rating upgrade to investment grade will provide a boost, and as we approach the so-called “demographic sweet spot”—where a young and increasingly prosperous working population drive rapidly increasing consumption—a long period of prosperity for the Philippines is forecast by most economists.

Infrastructure, on which the government has put particular emphasis, will be critical to ensuring lasting economic growth.

Without the necessary investments in power plants, roads, airports, etc., the growth we are seeing could easily stall. Streamlining the bureaucracy and modernizing the regulatory environment are also important, and the positive reforms being implemented should be institutionalized so that they can no longer be reversed.

How the government performs on these fronts will be closely watched.

In the near term, what factors could cause the market to slow down?

A more sustainable recovery in the more developed markets such as the United States and Japan could cause foreign money to flow out of our market and into those markets.

Another is inflation and the likely attendant increase in interest rates, which would make other investment instruments more attractive.

Which brings me to another point.

I would put a cautionary note that the stock market is not for everyone, and is not the only way you can grow your money.

If you’re joining the bandwagon and are in it to try to make opportunistic gains, or simply relying on tips, you could get burned pretty badly when the inevitable correction comes.

Diversification

You would need a fairly large amount to be able to diversify your portfolio properly, and a strong stomach to be able to take the ups and downs. You should be prepared to leave your money for several years, but also have the wisdom to know when to cut your losses and the discipline to get out if it’s unlikely for a stock to ever recover in price or to recover within a reasonable timeframe.

Too many people hang on to a stock until it’s practically worthless!

Pooled funds such as mutual funds and unit investment trust funds (UITFs), allow you to participate in the market even with a small amount of money, as minimum investment is only P5,000.

They also have the advantage of being run by professional fund managers. An equity fund will have up to 90 percent of its funds invested in a wide variety of stocks (100 percent for UITF equity funds), giving you the diversification you need.

Bear in mind, however, that returns are not guaranteed and an equity fund will generally move up and down with the market.

An older person or one who needs the money in the near future is better off investing in bonds, which give lower returns but are more stable. A pooled fund invested mainly in bonds is a good alternative.

In fact, while more people have been investing in equity funds, bond funds are still the most popular pooled fund in the country, perhaps an indicator of generally lower risk appetites.

Balanced funds, with their close to 50:50 mix of stocks and bonds, have also been growing as they provide a good balance between risk and return.

Perversely, bond prices rise as interest rates decline, so with the declining interest rates of late, bond funds have also been giving good returns.

Given the strong economic performance of the Philippines, the massive liquidity, and the expected ratings upgrade, interest rates are not expected to rise anytime soon.

Thus, this is a good year to invest because wherever you put your money, whether in stocks or bonds, you are likely to make good returns.

Financial manager

However, the key is in knowing what you are doing.

For most of us who have neither the time nor the money to understand and play the markets properly, it is probably better and easier to leave management of our funds to a reputable company with professional fund managers.

Growth is sustainable as it stands on excellent fundamentals, but it will not be a straight line upward—corrections are healthy and inevitable.

You can leave the worrying about how to allocate your money and when to move it to a professional.

It is also advisable to talk to a financial advisor.

A good one will take the time to thoroughly understand your needs, determine your cash flow requirements, and help you allocate your funds to various types of financial instruments, both for short and long term needs.

He or she will also facilitate the placement of your funds and ensure you fill out all the necessary documentation properly.

As to how high the PSEi can go this year … 7500? Why not!

(The author is president and CEO of Sun Life Financial Philippines.)

Sam Miguel
03-22-2013, 10:37 AM
‘Red alerts’ for troubled public firms eyed

By Doris C. Dumlao

Philippine Daily Inquirer

10:29 pm | Thursday, March 21st, 2013

The Philippine Stock Exchange is proposing an overhaul of guidelines governing companies in financial distress or under corporate rehabilitation to include “red alerts” prior to actual bankruptcy, aiming to better protect minority investors who might otherwise get stuck with illiquid or insolvent investments.

The PSE issued on Thursday a concept paper through which the regulatory framework for companies undergoing corporate rehabilitation or those which are about to undergo rehabilitation could be improved, drawing from best practices in other jurisdictions.

Under the existing rehabilitation guidelines, the PSE—upon receipt of a disclosure or any planned or actual filing of a petition for rehabilitation—will immediately impose a trading suspension on the shares of a company that is actually or potentially the subject of rehabilitation proceedings.

But the PSE noted that under the existing guidelines, there is no exit mechanism for the minority stockholders of distressed companies in view of the immediate suspension of the trading of shares. Although the guidelines provide for the lifting of the trading suspension under certain conditions, the PSE said a freefall of the share prices was expected once rehabilitation starts, leaving the stockholders with no option but to sell shares at a large discount or stay invested in a financially unstable company.

“In order to warn investors of the financial state of the investee company and afford them a timely opportunity to dispose of their shares, the proposed pre-rehabilitation rules identify red alerts that indicate a possible bankruptcy and require listed companies to immediately report the existence of these circumstances to the exchange,” the paper said.

In order to give the minority shareholders sufficient warning and a timely opportunity to exit a company experiencing financial distress, the PSE proposes to adopt pre-rehabilitation rules that will require an issuer to disclose the following:

Disposal by the issuer of its major business;

Suspension of the business operations for at least six months for any reason;

Negative stockholders’ equity for three consecutive years;

Any delay in the payment of loans amounting to 10 percent of the total assets of the issuer; and

Issuance by its external auditor of a qualified or adverse opinion on the financial statements of the company for three consecutive years.

Upon the receipt of the disclosure, the PSE plans to designate the issuer as a “company under financial distress” and issue a public notice to this effect. Within five days from the classification, the issuer will be required to submit a business plan to address the situation, together with the timetable of implementation.

The PSE also proposed that trading on the shares of a company under distress would continue without prejudice to the imposition of a trading suspension on other grounds provided for in other rules of the local bourse.

During the period by which a company has been classified to be under distress, the issuer will be required to submit within 15 days after the close of each month a report on the progress of its business plan.

Sam Miguel
03-22-2013, 10:38 AM
Stocks recover lost ground

Philippine Daily Inquirer

10:30 pm | Thursday, March 21st, 2013

The local stock market on Thursday recovered from an eight-day slump as investors across the Asia Pacific took heart from the US Federal Reserve’s vow to maintain its easy monetary policy.

After pulling back by 6.5 percent since hitting record levels earlier this month, the Philippine Stock Exchange index clawed back 53.36 points, or 0.83 percent, to close at 6,472.98.

Fund managers said the decline seen in the last eight days was a good opportunity, allowing investors to reenter the market after locking in gains from recent highs.

All counters bounced back. The highest gainers were the services (+2.31 percent) and mining/oil (+1.93 percent) counters.

Value turnover amounted to P9.5 billion. There were twice as many advancers (103) for every decliner (50).

Semirara Mining stood out during Thursday’s trading session (+7.09 percent) on reports that its coal mine may resume operations by April.

Investors also picked up shares of Belle, PLDT, Philex, ICTSI, Megaworld, BPI, Petron, AEV and EDC. Doris C. Dumlao

Sam Miguel
03-22-2013, 10:44 AM
Former stockbroker convicted for violations of securities law

Judgment sets P2.1M fine, but no jail time

By Doris C. Dumlao

2:41 am | Thursday, March 21st, 2013

A former stockbroker who had defrauded clients was convicted for seven violations of securities laws, the first criminal conviction under the Securities Regulation Code.

The Regional trial court of Makati City (RTC) found Francisco Borromeo, former president of the defunct brokerage house Asian Capital Equities Inc. (ACEI), guilty of securities violations. He was sentenced to pay a total amount of P2.1 million.

Given the criminal nature of the complaint, some of the victims had hoped that the judgment would include some prison term, but the Makati court did not prescribe any.

While it was also cited as a landmark case, some market practitioners were left wondering why there was no jail time ordered for Borromeo.

The cases against Borromeo were filed on January 2005 for “unlawful and felonious acts he committed in order to defraud his clients, including, among others, the sale of his client’s shares without his client’s consent, the use of fictitious and dummy accounts in buying transactions and his failure to deliver the payment proceeds from the sale of his client’s shares,” the PSE said in a statement.

The amount involved was estimated at a minimum of P100 million.

The stockbrokerage ACEI was shut down in 2003 and its assets, including its trading right, were liquidated in 2008 to settle some liabilities to clients.

The verdict was issued by Judge Selma Palacio Alaras of Branch 62 of the RTC on March 19, 2013, following the withdrawal of Borromeo’s pleas of not guilty and his voluntary entry of pleas of guilty on all seven charges, the PSE said in a statement.

“In the course of the presentation of evidence against the accused, Borromeo reconsidered his ‘not guilty’ plea and entered a plea of guilty,” said Senior State Prosecutor Peter Ong of the Department of Justice.

Borromeo was arraigned on Aug. 14, 2007, where he entered ‘not guilty’ pleas to all the charges filed against him. In May 2007, the PSE sought the help of the public in tracking down Borromeo, who had gone into hiding after several arrest warrants were issued against him.

PSE president Hans Sicat said the decision was in line with the good governance efforts of the PSE and the government. “I understand that this is the first criminal conviction under the Securities Regulation Code which is one of the reasons why the PSE has been following this case closely. The outcome of this case shows that white collar crimes are punished in this country,” Sicat said.

“We thank all the hard work of the Securities and Exchange Commission and the Department of Justice in helping ensure that justice is served to Borromeo. This should help give more confidence to the growing investing public,” Sicat added.

Sam Miguel
03-26-2013, 08:19 AM
Share prices gain on upbeat sentiment

Philippine Daily Inquirer

10:19 pm | Monday, March 25th, 2013

Local stocks on Monday gained for a third session as risk appetite across the region was boosted by a bailout deal for Cyprus.

The main-share Philippine Stock Exchange index surged by 78.88 points, or 1.21 percent, to close at 6,597.59.

The day’s gains were led by the property counter (+2.28 percent) while the financial, industrial and services counters also rose by over 1 percent.

Value turnover amounted to P8.98 billion.

There were 99 advancers against 64 decliners, while 34 stocks were unchanged.

The biggest index gainers were ALI (+3.69 percent), Bloomberry (+3.68 percent) and AGI (+3.34 percent).

Investors also snapped up shares of MPI, Metrobank, AP, JFC, Megaworld, URC and ICTSI.

On the other hand, the day’s gains were tempered by the decline of Semirara, Meralco, BDO, DMCI and MWC.

The Holy Week is usually a time for the local stock market to hunt for bargains. Also, window-dressing activities aided trading.

Markets across the region were upbeat as Cyprus struck a $13-billion international bailout deal, as it narrowly averted a financial meltdown. Doris C. Dumlao

Sam Miguel
03-27-2013, 08:44 AM
More liberal foreign equity rule looms

SEC draft makes PLDT capital structure ‘acceptable’

By Doris C. Dumlao

Philippine Daily Inquirer

9:31 pm | Tuesday, March 26th, 2013

The Securities and Exchange Commission has drafted a new set of guidelines on foreign ownership in partly nationalized industries—a more liberal framework wherein the 40-percent foreign equity limit is prescribed on both the voting shares and total outstanding shares.

The draft guidelines, which the SEC is releasing for further public feedback, make the recent capital restructuring of telecom giant Philippine Long Distance Telephone Co. involving the issuance of voting preferred shares acceptable.

“Per the Supreme Court decision, our CFD (corporate finance department) inquired into PLDT ownership structure and based on its report, PLDT is compliant,” SEC Chair Teresita Herbosa said in a text message, when asked whether the telecom firm’s issuance of voting preferred shares was suitable as compliance under the new draft of guidelines.

Based on the new guidelines, all covered corporations must, at all times, observe the constitutional or statutory ownership requirement, referring to the 60-40 percent local-foreign ownership requirement.

“For purposes of determining compliance therewith, the required percentage of Filipino ownership shall be applied to both a) the total number of outstanding shares of stock entitled to vote in the election of directors; and b) the total number of outstanding shares of stock, whether or not entitled to vote in the election of directors,” the new draft said.

“In case the law requiring a certain percentage of ownership to belong to Filipinos specifically refers to voting stock, the requirements set forth therein shall be complied with,” the draft said.

All covered corporations were also required to adopt a system of internal controls that will enable them to monitor and observe compliance with the provisions on ownership requirements provided in the Constitution.

The new draft guidelines issued by the SEC were seen as more liberal compared to the first draft, which required that all classes of shares follow the 60-40 percent limit.

A landmark Supreme Court ruling earlier stated that PLDT had exceeded the maximum allowable 40-percent foreign equity cap prescribed by the 1987 Constitution. The ruling essentially redefined foreign capital, stating that non-voting shares did not count as equity when computing a company’s Filipino ownership level for purposes of compliance with the 40-percent foreign equity limit on key industries like property and utilities.

To cure the situation, PLDT adopted a solution wherein it issued 150 million new voting preferred shares to BTF Holdings Inc., a subsidiary of its employees’ beneficial trust fund.

This brought down the voting rights of foreign shareholders in PLDT to 34.5 percent from the previous 58.4 percent.

The SEC previously drafted a more stringent rule that would have made PLDT’s voting preferred share issuance non-eligible but the corporate regulator eased its draft after the entry of judgment issued by the Supreme Court made it clear that the 60-40 percent ownership limit favoring local shareholders would apply only to voting shares.

Meanwhile, the two-tier formula is meant to address concerns on the use of dummies in corporate structure. Aside from prescribing the 60-40 percent local-foreign ownership limit on voting shares, another tier of 60-40 percent cap was prescribed for the rest of the shares.

After the issuance of the second draft, the SEC is expected to conduct a new dialogue with stakeholders before finalizing the guidelines.

Sam Miguel
03-27-2013, 08:46 AM
PH stocks rise for 4th straight day in Holy Week bargain-hunt

By Doris Dumlao

Philippine Daily Inquirer

9:51 pm | Tuesday, March 26th, 2013

MANILA, Philippines—Local stocks gained ground for the fourth straight session on Tuesday, on the back of Holy Week bargain-hunting alongside some quarter-end window-dressing.

Defying mostly lackluster regional markets, the main-share Philippine Stock Exchange index rallied by 67.53 points or 1.02 percent to close at 6,665.12.

All counters were up but the biggest gainers were the holding firm and services counters, which both rose by 1.4 percent.

Total value turnover for the day amounted to P9 billion. There were 88 advancers that outnumbered 59 decliners while 48 stocks were unchanged.

The day’s biggest index gainer was Alliance Global Inc. (+3.43 percent), which obtained consent from bondholders to revise the covenant governing a $500-million bond issue.

AGI was also the most actively traded stock for the day, followed by PLDT (+1.92 percent), which benefited from the issuance of a revised Securities and Exchange Commission draft on foreign ownership that makes its recent capital restructuring compliant with the 60-40 percent ownership rule favoring local investors.

Investors also snapped up shares of Manila Water Corp., Metro Pacific Investments, JG Summit, Robinsons Land, Jollibee, Universal Robina, SM and DMCI.

Other non-index stocks that gained in heavy trade were Boulevard Holdings (+4.58 percent) and LT Group (+1.91 percent). LTG is expected to announce a follow-on equity offering of as much as $800 million after Easter.

Sam Miguel
03-27-2013, 08:50 AM
Biz Buzz

By the staff

Philippine Daily Inquirer

8:57 pm | Tuesday, March 26th, 2013

Many trading participants have fond memories of Leonardo Quinitio, head of the capital market development division of the Philippine Stock Exchange, as a “cheerleader” for the local bourse and some were surprised at his unceremonial dismissal.

Stockbrokerage Campos Lanuza & Co., for instance, said on its Twitter account that this was “raising eyebrows because he’s the roadshow face of the PSE outside Metro Manila,” adding Quinitio had served the PSE longer than some of those in management.

The PSE’s initial disclosure on Monday only stated that Quinitio’s employment was terminated with immediate effect, thus raising more questions than answers. Yesterday, the PSE filed another disclosure saying that the termination “arose from findings of breach of company policies and protocols.” A longer statement issued by the PSE later in the day alleged Quinitio’s “falsification of documents, fraudulent expense claims and undocumented arrangements.

“The PSE has rules in place to deal with these situations and enforces them to immediately correct breaches and to ensure that the integrity of its processes are not compromised,” the PSE said.

According to one PSE source, Quinitio—who joined the PSE in 2006 and was appointed in charge of the capital markets development division in 2010—was asked to go on forced leave while the PSE conducted its probe that led to the eventual conclusion of “breach of company policies and protocols.” From the PSE’s point of view, this was part of internal housekeeping and that its decision to immediately cut off Quinitio was made after “a thorough investigation and affording due process.”

On the other hand, some quarters close to Quinito claimed that he might have been but a victim of corporate politics and that he was given little opportunity to clear himself. Doris C. Dumlao

No jail term?

It was supposed to be a landmark ruling for being the first criminal conviction under the Securities Regulation Code (SRC), but not everyone was jubilant. Judge Selma Palacios Alaras of the Regional Trial Court of Makati City convicted Francisco Borromeo, former president of the defunct brokerage house Asian Capital Equities Inc. on seven counts of securities violations, but some wondered why there was no jail term. Instead, Borromeo entered into a plea bargain and paid P2.1 million in penalties.

As some people think that P2.1 million might be too cheap a price to pay for (and too measly to discourage) white-collar crimes (especially if the amount involved is much higher), we asked Securities and Exchange Commission Chair Teresita Herbosa why this was so, and this was her explanation: “The SRC provides penalties upon conviction of fine between P50,000 and P5 million OR imprisonment of seven to 21 years or both AT THE DISCRETION OF THE COURT (emphasis hers).”

As such, Herbosa said the imposition of the monetary fine only was in accordance with SRC.

Borromeo was convicted for “unlawful and felonious acts committed in order to defraud his clients, including, among others, the sale of his client’s shares without his client’s consent, the use of fictitious and dummy accounts in buying transactions and his failure to deliver the payment proceeds from the sale of his client’s shares.” His stock brokerage, Asian Capital, was shut down in 2003 and its assets, including its trading right, were liquidated in 2008 to settle liabilities to clients.

In the meantime, after this episode, Borromeo has reportedly reinvented himself into a non-finance related profession. Doris C. Dumlao

CP’s charm offensive

After being savaged in the media for what its critics claimed were unfair tax breaks given to it by the government, Thai agribusiness giant Charoen Pokphand (CP) is now on a charm offensive.

It’s officials announced this week that CP’s local unit, Charoen Pokphand Foods (CPF), will invest a total of $120 million in the Philippine agribusiness sector “over the next three years” (that’s for the rest of President Aquino’s term).

In fact, a statement issued by the company quoted CPF official Kasem Manoi saying that the investment would be made in agro-industrial businesses such as livestock growing and aquaculture, especially for its shrimp and fish businesses.

The investments are also intended to expand the company’s livestock and poultry business in Pampanga, including its broiler, layer and swine operations. It will also boost its shrimp hatcheries and fish culture operations in Luzon, Visayas and Mindanao.

Established locally in 2007 starting with a shrimp hatchery, CPF has operations spanning the entire country (albeit quietly). Its two core business lines are the livestock business, which comprises broiler, layer and swine and the aquaculture business focusing on shrimp and fish.

Will the charm offensive—including the promise of bringing more investments into the country—work, against its array of critics? Time will tell. Daxim L. Lucas

Tambunting tussle redux

Some Antipolo City “homeowners” pushed through with their picket last Monday in front of the Planters Development Bank headquarters in Makati City.

The crux of the issue was the alleged refusal of bank chair Jesus Tambunting to turn over the titles to a 43-hectare property in Antipolo (owned jointly by him and six other siblings) that would formalize a deal that called for the government to buy the land and turn it over to the former “informal settlers.”

We were told that Tambunting, alarmed at the situation, spoke with one of the leaders of the homeowners’ group, asking that they meet on Wednesday, or two days after that, to discuss the issue. (The homeowners were also requested to disperse, by the way.)

At the succeeding meeting, a representative of Tambunting told the homeowners that the land titles would finally be turned over to them on either Thursday (the following day) or Friday. Imagine their joy and relief.

As a gesture of good faith, the group also decided to cancel a second picket they had scheduled for Friday at the Planters Bank headquarters on Gil Puyat Ave. in Makati City (for which they had already obtained permits).

Then Thursday came, and Friday came … but no land titles followed, we hear. As of Saturday, nothing has been turned over, leaving the leaders of the homeowners’ group wondering if a fast one was pulled on them.

Will there be a happy ending to this tale of woes (for all stakeholders involved, including the Tambunting siblings split right down the middle)? Only time will tell, it seems. Daxim L. Lucas

Joescoundrel
03-29-2013, 10:43 AM
Index hits new high on Fitch upgrade

By Neil Jerome C. Morales

(The Philippine Star) | Updated March 28, 2013 - 12:00am

MANILA, Philippines - The Philippine Stock Exchange index (PSEi) hit a new high yesterday on Fitch Ratings upgrade on the Philippines’ credit ratings.

The main composite index rallied for the fifth straight session, surging 2.74 percent or 182.35 points to settle at 6,847.47. It was the biggest single day gain this year for the main index, which posted a new intraday high at 6,873.89.

The broader all shares index climbed 1.70 percent or 70.60 points to 4,234.31.

“It was a resurrection day on Holy Wednesday for the stock market,” Astro C. del Castillo, managing director of First Grade Finance Inc., said in a phone interview.

“This will fuel more investments in the country, both for hot money and foreign direct investments,” Del Castillo said.

Fitch Ratings yesterday upgraded the country’s sovereign ratings to investment grade, citing “resilient economic growth” and fiscal reforms.

Del Castillo said the market was surprised by the earlier than expected upgrade.

Wall Street and Asian markets were also in the positive territory as the US economy showed a rebound through the stronger demand for US-made durable goods.

The Dow Jones industrial average added 0.77 percent or 111.90 points to another record at 14,559.65 while the broader Standard & Poor’s 500 index rose 0.78 percent or 12.08 points to 1,563.77.

Sam Miguel
04-01-2013, 10:45 AM
PSEi seen hitting 7,000 pts

By Neil Jerome C. Morales

(The Philippine Star) | Updated April 1, 2013 - 12:00am

MANILA, Philippines - The Philippine Stock Exchange index (PSEi) is seen testing the unprecedented 7,000-point level in the near term following the country’s elevation to investment grade status, analysts said.

The five-percent or 318.76-point surge in the PSEi to an all-time high of 6,847.47 last Friday from a week ago will likely be followed this week, they said.

“The zest in local equities is seen to prevail post-Easter, mainly due to positive reaction to Fitch’s investment grade rating,” said Freya Natividad, investment analyst at brokerage firm 2Trade-Asia.com.

Justino B. Calaycay Jr., analyst at Accord Capital Equities Inc., said the opening trades, if it breaks into the 6,900-level, will be critical in restoring and sustaining the bullish trend.

Natividad said the ratings upgrade will jack up optimism on the country’s macro-economic health and resilience.

On Wednesday, Fitch Ratings upgraded the Philippines’ sovereign ratings to investment grade, citing “resilient economic growth” and fiscal reforms.

Higher credit score translates to lower borrowing costs and increased valuations for stocks of Philippine companies.

Natividad said the market is awaiting similar upgrades from international credit raters Standard & Poor’s and Moody’s.

“Hopefully, the other rating agencies will follow suit so we can start seeing more investors participate in the growth of our listed companies and the economy,” said PSE president and CEO Hans B. Sicat.

Positive leads will also come from abroad particularly in the United States.

Natividad said that barring negative sequel stories from the euro zone, the improving vote of confidence on the US economy will sustain investor confidence.

For this week, Natividad said index-linked stocks particularly those benefiting from improved economic environment will lead the ascent.

2TradeAsia pegged the immediate support level at 6,800 and resistance at 6,900 to 6,950.

Year-to-date the PSEi has jumped 17.8 percent or 1,034.74 points. The main index has also recorded new closing highs by a total of 24 times so far this year.

Sam Miguel
04-02-2013, 08:25 AM
Exchange launches online trading platform

PSETradex seen to attract new breed of investors

By Doris C. Dumlao

Philippine Daily Inquirer

8:22 pm | Monday, April 1st, 2013

The Philippine Stock Exchange has rolled out an online trading platform meant to expand the country’s thin domestic investor base using technology that stock brokers can use to trade equities “in a totally mobile environment.”

The new platform, called PSETradex, serves like a facilitator for a technology provider, giving broker-dealers the capability to offer an online platform to their clients at a much lower price than if they were to develop their own online trading IT solution.

“Trading participants can now sign up for the PSETradex which they can offer to their clients,” PSE president Hans Sicat said in a statement.

“We are excited about this new service which we believe will further expand the brokers’ reach to investors and boost activity in the stock market in a significant way.”

The PSE is asking Maybank ATR Kim Eng Securities to become one of the first brokerage firms to use PSETradex.

PSETradex offers a web-based trading management system that allows users to trade stocks, monitor their order status, manage their stock portfolio and gather relevant market information through their computers. In addition, it can provide mobile wireless application for equity trading which operates on web-based mobile phones. This means, investors who have registered with participating stockbrokers are enabled to trade in a mobile environment.

“The system is designed to let investors trade using their mobile phones and tablets,” Sicat said.

To date, less than 1 percent of the country’s close to 100 million population participate in the local stock market. For those who invest in stocks, most trades are done via phone calls or physical interaction with stockbrokers or agents.

But the PSE noted that online trading has grown by 42 percent yearly in the past five years.

PSETradex seeks to attract a “new breed” of investors, on top of those already trading through platforms offered by some brokerage houses. The new platform was launched right after the Philippine sovereign was assigned an investment grade rating by global credit watcher Fitch Ratings.

To date, 10 to 15 trading participants, out of the 133 active brokerage houses, have their proprietary online trading platform. These include COL Financial, First Metro Securities, 2TradeAsia.Com, AB Capital Securities and BPI Securities.

The PSE has engaged the services of Malaysian securities trading solution N2N Connect Berhad for this online trading platform. N2N has been involved in the information, communications and technology industry for more than 25 years. It has expertise in developing innovative solutions for capital market clients. N2N has expanded its business to Singapore, Saudi Arabia, Vietnam, Hong Kong, China and Indonesia.

Sam Miguel
04-02-2013, 08:25 AM
Stocks break intraday record trade

Philippine Daily Inquirer

8:23 pm | Monday, April 1st, 2013

The local stocks index soared to a new record high, breaching 6,900 Monday morning. But at the end of the trading day, it gave up hefty intraday gains as profit-taking dominated the afternoon session.

The Philippine Stock Exchange closed 7.88 points or 0.12 percent lower at 6,839.59. The index rallied by as much as 1 percent in morning trade and hit a new record intraday peak of 6,956.92.

The morning session was marked by a buying frenzy, seen to be a follow-through after Fitch Ratings’ upgrade of the country’s sovereign rating to investment grade last week. But in the afternoon, that trend was reversed.

Veteran broker Ismael Cruz, president of IGC Securities, said the euphoria had started but a correction was bound to come.

“After that, the market will advance again and will possibly hit 7,200 or even 7,500,” Cruz said.

Value turnover amounted to P21.74 billion. There were 72 advancers against 87 decliners, while 46 stocks were unchanged.

The index was weighed down by the selldown on the following large-cap stocks: PLDT (-2.14 percent), URC (-1.77 percent), AGI (-1.18 percent), ALI (-3.98 percent) , Bloomberry (-2.67 percent) , Meralco

(-2.33 percent) and AEV (-1.45 percent).

Gains posted by the following stocks tempered the pullback: SM Prime (+3.66 percent), ICTSI (+3.15 percent), SMDC (+3.14 percent), Semirara (+2.62 percent), AC (+2.47 percent), DMCI (+1.55 percent) and SMC (+1.3 percent). Doris C. Dumlao

Sam Miguel
04-05-2013, 08:31 AM
Share prices decline; peso weakens

Philippine Daily Inquirer

8:43 pm | Thursday, April 4th, 2013

Local stocks slipped Thursday, dragging the main index below the 6,800 level, as regional markets were spooked by a weak US economic data and growing tension in the Korean peninsula.

Also, the peso fell to the 41-to-a-dollar territory to close at its weakest level since the start of the year.

The main-share Philippine Stock Exchange index lost 31.58 points, or 0.46 percent, to close at 6,783.72.

Value turnover was thin at P6.71 billion. There were 71 advancers against 88 decliners, while 46 stocks were unchanged.

“Market is reflecting rising risk aversion,” said Banco de Oro Unibank chief strategist Jonathan Ravelas. If the next support level at 6,750 would give way, he said, this could extend the correction towards the 6,500 to 6,600 levels.

Investors sold down shares of ALI, MPI, MWC and BPI which all declined by over 1 percent. SM Prime, EDC, Bloomberry, AC, FGEN and RLC also contributed to the slump.

On the other hand, the PSEi’s decline was tempered by the modest gains of Belle, SMC, AEV and AP.

According to currency traders, reports that North Korea is trying to revive an old nuclear facility have spooked financial markets around the world.

The peso Thursday closed at 41.15 against the US dollar, down by 24.5 centavos from the previous day’s finish of 40.905:$1.

Intraday high reached 40.95:$1, while intraday low was 41.175:$1.

Amid eagerness of fund owners to shift to safer havens and away from emerging-market assets, volume of trade breached the $1-billion mark to reach $1.122 billion at the end of the trading day. The amount was up from the $920.2 million traded previously.

“The depreciation of the peso was due to flight to quality resulting from what is happening in North Korea,” Ravelas said. “Domestic factors are favorable, but these were not enough to counter the impact of external developments.” Doris C. Dumlao and Michelle V. Remo

Sam Miguel
05-02-2013, 09:35 AM
You don’t always have to beat the index

By Efren Ll. Cruz

Philippine Daily Inquirer

3:42 am | Wednesday, April 10th, 2013

Question: Now that I am in the stock market, how do I know if I am earning enough? What measures do I use?—Participant at EnRich CD-RW personal finance training

Answer: I am currently in the market for a new notebook PC (or at least that is what I am trying to convince myself of). It’s bad enough that there are many CPUs to choose from, but some PCs are also already loaded with different versions of the latest operating system. Plus, the new-generation notebook PCs are ultra-light while others are in the form of tablets with clip on or magnetic keyboard. There are notebook PCs with touchscreen capability and digital pens. Wow!

It’s a good thing there are still sales people who are not after a quick sale. When I came across this particular salesman in one of my window-shopping episodes, I asked him what type of computer would be good for writing documents, crunching numbers on spreadsheets and expressing my ideas through presentation slides with embedded videos. I also mentioned that I needed one that has at least four to five hours of battery life.

The kind salesman said that given my needs, I could do with just dual core processors. And for extra battery life, he recommended an “ultrabook” or a tablet PC with clip-on keyboard. He made sense.

A notebook PC that came with the fastest processor, optical drive, touchscreen capability, long battery life, a terabyte of hard disk space and all the ports costs P60,000. The computers he was recommending would only cost about P35,000. Depending on the screen size, I could even get a branded one for P28,000.

But what does the process of buying a notebook PC have to do with trying to beat the Philippine composite index or PSEi? Your investment goals, as tempered by your risk preference, will determine what you need to earn, not a moving target like the return of the PSEi.

Firstly, nobody is brilliant in a bull market as you should be making money when almost everything is going up in value. But you don’t have to earn as much as the PSEi does if that is not what you need. Remember, it is difficult to outperform a broad market index in a bull run. Comparing your portfolio performance to that of the PSEi in this kind of a market can be downright frustrating for the novice and even average investor.

Now imagine a bear market where everything is falling. The PSEi, being a broad market indicator, technically has a portfolio that will always be invested in stocks. If you actively manage your portfolio, you would probably get out of stocks totally or at least minimize your exposure as soon as a bear market trend is confirmed. It would therefore be quite easy to outperform the PSEi. But mind you, we are talking about relative performance. So, even if you outperformed the PSEi going down, it could very well be that your return would still be negative, albeit smaller.

This is why the best benchmark for your investment performance would still be the resulting return targets borne out of your investment goals and risk preference.

Let’s say you needed to earn 15 percent per year and you actually hit this target. You should not regret your actions even if the stock market made 20 percent per year. While generating a higher return would have shortened your investing period to reach your goals, you would have also done that by taking inordinate risks on your money.

On the flip side of things, you should not console yourself with a negative return smaller than that of the PSEi’s. While losses are sometimes unavoidable, you should incur them as infrequently as possible. Remember, it is bad enough that you fell short of your target. What more if the return was negative?

There is a need to do comprehensive financial planning either by yourself or through the help of experts before you invest to ensure that you perform as close to your target as possible. If you choose to do it yourself, try the many personal finance calculators already available on the web or freely distributed. You may also try Ya!man, the country’s first personal finance mobile app that is also free from www.personalfinance.ph.

Personal finance experts abound, either as part of financial product providers or as independent financial planners. If you want to get a hold of financial planners, you may visit http://rfp.ph/find_rfp or get in touch with financial planners from mutual funds, unit investment trust funds or variable unit-linked providers. Tell them that you want a needs-based approach to financial planning.

If you want to learn more about investing, visit www.personalfinance.ph. There are many more free resources there that you can tap. You may also want to attend EnRich on May 18, our public training on personal finance.

You don’t always have to beat the index; just aim for your own benchmark returns, especially if these are lower than the PSEi’s average performance. You will end up enjoying life and investing better.

Sam Miguel
05-06-2013, 08:53 AM
Lawyer urges SEC to apply high court ruling on foreign ownership

Regulator’s draft guidelines said to contain questionable provisions

By Paolo G. Montecillo

Philippine Daily Inquirer

5:49 am | Monday, May 6th, 2013

MANILA, Philippines—The Securities and Exchange Commission (SEC) has been asked to stay true to the spirit of the Supreme Court ruling on foreign ownership, applying restrictions separately on each class of shares in utility companies.

In a position paper submitted to the corporate regulator, lawyer Jose Roy III said the new draft guidelines on foreign ownership of the SEC went against the high tribunal’s clear definition of how foreign interests in restricted industries should be treated.

“I am deeply concerned that it may be beyond the regulatory or interpretative power of the Commission to alter the basis of a distinction already delineated and defined by the Supreme Court,” Roy said in a three-page paper.

His position bucks the general trend in the business community that favors more relaxed rules on foreign ownership in utility firms.

Among the business groups backing easier rules on foreign ownership include the Makati Business Club, the Management Association of the Philippines and the Financial Executives Institute of the Philippines (Finex).

Roy—one of the defense lawyers during the impeachment trial of former Chief Justice Renato Corona—said that under the Constitution, foreigners are not allowed to own more than 40 percent of companies engaged in public utilities such as telecommunications and water distribution firms. Foreign entities are also banned from owning any stake in media companies.

Roy pointed out that the Supreme Court’s decision in the recent Gamboa case looked into intent of the framers of the Constitution.

The lawyer said that these provisions have been included to ensure that vital industries are never controlled by “aliens.”

The so-called Gamboa case refers to the 2007 suit filed by the late Wilson Gamboa, a shareholder in Philippine Long Distance Telephone Co. (PLDT), which tried to block the Manuel V. Pangilinan group’s additional purchase of shares in the country’s largest telco.

The SC ruled that the rule capping foreign ownership in firms to 40 percent should be applied separately to all classes of shares.

This went against the local practice of local companies issuing low-yield preferred shares to local shareholders to offset the amount of common shares held by foreign principals.

“The SC categorically said that ‘to construe broadly the term capital as the total outstanding capital stock including both common and non-voting preferred shares grossly contravenes the intent and letter of the Constitution,’” Roy said, citing the Gamboa case.

“Regrettably, the current provision in the guidelines lumps together the common and preferred voting shares as one class, not limiting the distinction to voting rights,” Roy said.

Roy is part of the Roy & Syquia law firm, which specializes in corporate consulting and litigation

Sam Miguel
05-07-2013, 08:32 AM
Backdoor listing

By Den Somera

Philippine Daily Inquirer

8:17 pm | Monday, May 6th, 2013

The market made a fantastic weekly advance of 189.91 points or 2.7 percent at the end of trading last week on the back of the investment credit-rating upgrade it received from Standard & Poor’s (S&P). Similar to the first it received from Fitch Ratings over a month ago, the country was given a “stable” outlook while its credit rating was “raised to BBB- from BB+.”

Expectedly, the country is set for more capital inflows that would fuel more business opportunity and growth. One group reportedly getting ready to ride on the expected market tide is that headed by mining and oil businessman Alfredo “Fred” C. Ramos. This time, his subject of interest is to expand and enhance the private family flagship business, National Bookstore Inc.

Along with this development is the news that dormant listed company Vulcan Industrial and Mining Corp. (VUL) will be the backdoor vehicle for National Bookstore.

Vulcan’s plan

Retracing VUL’s market trading record, it looks like the plan has been hatched pretty much earlier, for VUL shares started to trade actively as early as the fourth quarter of 2012. Before that time, trading on VUL shares were sparing and largely below its par value of P1. Except for an occasional trade of more than one million shares in the last six months, the average daily volume of VUL has been just over 100,000 shares. However, on Nov. 5, 2012, daily volume suddenly rose to 23.75 million shares.

Interestingly, the day’s transaction for VUL on Nov. 5 was flat: It “opened at P1.39, hit the high of P1.39, moved sideways to the low of P1.39 and closed at P1.39” a share. Despite the sudden increase in volume, VUL’s share price did not go through the usual speculative run during the day. The general investing public did not seem to have any idea of what was happening that they sold than bought.

This seems to be how the group has kept their plans from the public. On second thought, it could be as well a reflection of the group’s actual situation. The group may not yet be that clear on what to do that nothing has filtered through the public, which would explain as well the behavior of the public last Nov. 5. Meeting with the company’s top honchos, the plans for the company seemed to be still far from ready. Also, they have yet to obtain the necessary approvals to put things into proper motion.

The following measures are yet to be acted upon in the company’s annual stockholders’ meeting on May 29: “Approval in the increase of the authorized capital stock of the company from P600 million to P4 billion; approval of the subscription by National Bookstore Inc. and/or its designees to the increase in authorized capital stock at P1 per share through the conversion into equity of its advances amounting to P363,944,338 as of Dec. 31, 2012, as audited and cash subscription of up to P3,036,055,662.

“Approval of the waiver of public/rights offer relative to the increase in authorized capital stock via additional subscription of National Bookstore and/or its designees. Approval of the change in primary purpose from mining to retail, and relegation of mining and oil exploration as secondary purposes; approval of the following secondary purposes to include, among other things, wholesale, publishing, printing, manufacturing, distribution, contracting and all other activities necessary for or incidental thereto.

“Approval of the transfer of mining and oil-related assets; approval of the change in the corporate name from Vulcan Industrial and Mining Corp. to National Book Store Retail Corp., or such other name acceptable to the SEC and as may be determined by the board of Directors; and approval to delegate to the board of directors the authority to amend the By-Laws.”

VUL was incorporated in 1953. At present, it is mainly an oil and mineral exploration and mining company. It has been holding a number of Service Contracts (SC) and Geophysical Survey and Exploration Contracts (GSEC) since 1976 and, through its wholly owned subsidiary Vulcan Materials Corp. (VMC), “produces rock aggregates to create concretes and silica sand, ingredients used for making glasses and bottles.”

Bottom line spin

National Book Store is the biggest bookstore and office supply store chain in the Philippines. From available references, the company has an ongoing joint-venture agreement with SM Prime Holdings and Ayala Corp. Retail giants Robinson Land Corp. and Megaworld have exited from the joint-venture agreement with the company last Jan. 1, 2010. Araneta Center has likewise exited from the joint venture.

Anvil Publishing is reportedly a subsidiary of the company, but it may not be included in the deal. Obviously, more information is needed to understand the investment potential of the deal of placing the company public through VUL as backdoor vehicle. That’s why the ongoing price play on VUL does not have indicative value at all.

If you are one of those trying to ride on the stock play of VUL, this time as National Book Store, it is best to wait for more development.

In a surprising twist, the group’s top honchos are discouraging the public from speculating relative to the exercise. This is exactly opposite to the obviously induced market plays in some recent backdoor listing deals.

But if you wish to make some wild forward-looking conclusions about the future of the company, National Book Store has already established some foothold in Hong Kong—as far back as 2007 through a subsidiary—that could make the company become “a regional player version of the online retail store Amazon.com.”

Joescoundrel
05-13-2013, 10:22 AM
PSEi to test 7,300 level this wk

By Neil Jerome C. Morales

(The Philippine Star) | Updated May 13, 2013 - 12:00am

MANILA, Philippines - The continuous flow of funds into the stock market will allow the bellwether index to stay around the 7,200 level, with possible testing of the 7,300 mark this week.

“Sentiment will remain afloat following regional central bankers’ move to relax key monetary policies, on top of continued support for monthly bond purchases,” said Freya Natividad, investment analyst at brokerage firm 2Trade-Asia.com.

“With the added funds flowing into capital markets, fund managers are widely-expected to continue their search for higher yielding assets for the long-term,” she said.

Global fund managers are continuously pouring capital into emerging markets like the Philippines in search of higher yields.

Week-on-week, the Philippine Stock Exchange index (PSEi) gained 0.65 percent or 47.04 points to close at 7,262.38, marking the 29th time the main index posted a record high this year.

For Jonathan Ravelas, chief market strategist at BDO Unibank Inc., the market is still poised to see the 7,300 levels.

“But (the market) could be vulnerable to profit taking near the top,” Ravelas said.

“Participants will re-check the PSEi’s staying power above the 7,200 level this week, trailing progression from the peaceful conduct of the local and national elections,” Natividad said.

Some investors will likely reposition ahead of an anticipated rally back to the previous intraday high at 7,284, Natividad said.

2TradeAsia pegged the immediate support at 7,200-7,230 and resistance at 7,280-7,350.

An added push might also come from market abroad.

On Friday, Wall Street rose anew driven by the rally in several small cap companies.

The Dow Jones industrial average gained 0.2 percent or 35.87 points to 15,118.49 while the broader Standard & Poor’s 500 index added 0.4 percent or 7.03 points to 1,633.70.

Natividad said advanced economies are likely to spur growth this year through monetary measures.

Joescoundrel
05-13-2013, 10:23 AM
No property bubble – banks

By Prinz P. Magtulis

(The Philippine Star) | Updated May 13, 2013 - 12:00am

MANILA, Philippines - Banks are in agreement with the Bangko Sentral ng Pilipinas (BSP) when it said that a property bubble is far from forming despite exposures breaching regulatory limits.

Last Thursday, the central bank reported that property exposure of banks – real estate loans as a proportion of total loan portfolio – hit 20.86 percent last year, exceeding the 20-percent cap set during the Asian financial crisis.

The latest figure represented a revised calculation though, which dropped original exclusions granted to loans for low-cost housing and those with guarantees. It also captured data on securities issued to property firms.

“Exposure is still okay… We still have structural demand from new jobs and household formation,” Bankers Association of the Philippines president Lorenzo Tan said in a text message.

While data indeed exceeded limits, he said more important to monitor is the level of non-performing property loans – those unpaid 30 days after the due date – which continued to remain stable at just 3.7 percent of the total.

Vacancy levels in the market, affordable down payment schemes and the level of disposable income should also be watched.

“(Only) when these numbers exceed acceptable norms, it will be time to impose macro-prudential measures to down the market,” Tan pointed out.

For her part, Suzanne Felix, executive director of the Chamber of Thrift Banks, said the strong housing demand is structural in nature because it remains fueled primarily by a “booming economy.”

This, in effect, translates to higher per capita income across the population which in turn gives people more purchasing power to buy properties and developers to continue boosting the supply.

“End-users, which are a major market of thrift banks, remain the major market for housing, rather than speculators or investors,” Felix said in a separate text message.

“The Philippines is thus far from an oversupply problem,” she added.

The demand, BDO Capital president Eduardo Francisco said, is more of having “many opportunities” than banks relaxing their credit standards in chase of profits.

Jose Cuyegkeng, chief economist of ING Bank, said with the expectation of six- to seven-percent growth this year, it should not be a surprise that the real estate sector is expanding similarly fast.

What should be done is to contain the euphoria so that there is no “unwarranted exuberance in the property sector,” he said in a lecture over the weekend.

“That is why (the BSP) put in macro-prudential measures… They are always monitoring all these things, but so far I don’t think we have (asset bubbles),” Cuyegkeng said.

Sam Miguel
05-15-2013, 08:12 AM
Local stocks surge on reform hopes

PSEi breaches 7,300; exec forecasts 7,500 soon

By Doris C. Dumlao

Philippine Daily Inquirer

11:43 pm | Tuesday, May 14th, 2013

Investors loaded up on stocks of big local companies Tuesday after an orderly conduct of the mid-term elections, bringing the main index beyond the 7,300-mark for the first time.

The main-share Philippine Stock Exchange gained 51.08 points or 0.7 percent to close at a new all-time high of 7,313.46, led by banking and gaming stocks. A new intra-day high was likewise hit at 7,349.95.

PSE chair Jose Pardo quipped: “7,500 here we come. New highs can be expected after a credible and honest election.”

This marked the PSEi’s 30th record breakout for the year and the 91st under the Aquino administration.

“The market rallied on the back of the relatively smooth elections and good first-quarter earnings results so far. Top three banks Metrobank, BPI and BDO contributed half of the day’s PSEi gain,” said Gonzalo Ordoñez, president of First Metro Securities.

Metrobank, BDO and BPI respectively surged by 3.42 percent, 2 percent and 1.46 percent. The top three banks recently reported record-high first quarter results, with strong trading gains adding to net interest earnings.

Gaming stocks Bloomberry (+2.79 percent) and Belle (+2.76 percent) were likewise among the top index gainers.

Joseph Roxas, president of local stockbrokerage Eagle Equities, said this was due to discussions toward a “win-win” compromise on gaming taxes. He said hopes for a favorable resolution on gaming taxes alongside the reaffirmation of support for candidates under the Team PNoy banner boosted the market.

Biz Buzz reported on Monday that the gaming industry was seeing the “light at the end of the tunnel” on the gaming taxation issue.

Meanwhile, a big win for administration candidates, particularly in the Senate, is seen as crucial for the government to pursue the reforms that have boosted investor confidence during the last three years.

Total value turnover at the market yesterday stood at P10 billion.

Despite the overall index gain, there were just as many decliners as advancers (81) while 50 stocks were unchanged as investors focused on large-cap stocks.

Index heavyweight PLDT (+2.62 percent) also contributed to the day’s gains alongside Ayala Land Inc., Ayala Corp., SM Investments, Megaworld and URC.

Outside the index stocks, LTG, GT Capital, TransAsia and Cosco also gained in heavy volume.

On the other hand, the companies whose stocks fell in heavy volume were MPIC, Security Bank, Semirara and ICTSI.

Sam Miguel
05-16-2013, 08:17 AM
Should I invest in backdoor listing?

By Henry Ong

11:35 pm | Tuesday, May 14th, 2013

Q: I RECEIVED a few weeks ago some tips from my friends to buy this stock that is rarely traded in the market because a large private company is set to acquire it and use it as a vehicle for public listing. True enough, the stock price recently went up and I am wondering if I should buy some. But then I don’t know if I am buying it at right price since there is not much disclosure made about the deal. What should I do? Please advise —Bernadette Mendiola by email

If you have the time to research and monitor the stock market on daily basis, you may be able to afford to take additional risks by speculating on stocks that are about to introduce positive changes in the company. When you speculate, it does not mean that you will just buy stocks blindly by following what others are doing. Avoid gambling your hard earned money into stocks that you do not know anything about. Try to manage your risk by assessing the probability of the tip given to you by your friends. You can check the recent disclosures at the PSE about the stock. Get to know about the company and study the news announcement carefully. How probable that this deal is going to happen soon? Who are the people behind the new management? What is the nature of the new business and how promising is it?

Now, it is very common in a bullish market like this that there are always rumors about possible takeover of a listed company for backdoor listing. Some rumors may be valid but others may be just purely speculative. So always pay extra attention when you hear stories like this and see inactive stocks suddenly moving up rapidly for no reason at all. This could either be a potential disaster that you should avoid or a great buying opportunity.

Why backdoor listing? There are private companies that have trouble seeking access to capital for expansion and they could not undertake an Initial Public Offering (IPO) because they lack some requirements that will satisfy the regulators. Others take the backdoor listing route simply because it is cheaper and faster to get listed as compared to IPO which takes almost a year to prepare. In a strong market that we have now, it makes sense for private companies to buy dormant listed companies in the market as vehicle to go public in the shortest time possible.

Investing in backdoor listed companies can provide you extraordinary returns because you may be buying it at huge discount since there is no clear reference yet as to how much the stock should be priced. Ideally, the best way to profit from backdoor listing is to buy it prior to the official takeover announcement and average up by buying some more during the takeover period where the share price is expected to be strong.

One case study here is the backdoor listing of the LT Group (LTG), formerly known as Tanduay Holdings. When LTG announced that it was taking over Tanduay late last year, the share price of Tanduay went up by over 200 percent from P4.50 to P14.60 per share.

During that time, the market capitalization of LTG was only P45 billion. I noted in my column “Should I Invest in Speculative Stocks?,” which was published last August 8, 2012, that the market cap of LTG should increase by at least five times over time to make it comparable with other holding companies such as JG Summit (JGS) or Ayala Corp (AC).

Today, the market cap of LTG has increased to P233 billion and currently trading at P26 per share, 78 percent up from last year’s high. It is possible that its share price will further go up if projected earnings of the group will justify higher valuation.

While there are many more backdoor listings that are expected to happen this year, not all are going to be successful as the others because of differences in valuation, track record of management and market support. There are backdoor listings that are developmental.

For example, a listed company is taken over in order to list a new business that has no track record yet. An example of this is Bloomberry Resorts Corp (BLOOM). BLOOM has current market cap of Php128b and it is has no operating history yet as its hotel and casino business has just recently started.

The stock enjoys credible management team and good market support but it has to justify its current share price. At current valuation of the stock, assuming its target P/E is 30x which is the average valuation of casino companies abroad, its projected net income this year should be around P4 billion.

Other backdoor listings offer established businesses with strong brand, which can command immediate market following. An example of this is the planned backdoor listing of National Bookstore through Vulcan Mining. While there is not much information disclosed to the PSE yet about National Bookstore’s profitability history, you can safely assume that the share price has a lot of room to grow given its current market cap at only P1.2 billion.

You can take the risk of buying some shares now and wait for more information that will be disclosed in the next few weeks which will give you more clues on where the stock should be heading.

Investing in special situations such as takeovers and acquisitions can be highly profitable but it can be highly risky too. It is risky because you are buying into the stock based on the opportunity to profit on market speculations rather than based on underlying fundamental value. Always manage your risk by doing your homework before you buy.

Sam Miguel
06-03-2013, 09:25 AM
Peso back to the sweet spot

PHILEQUITY CORNER

By Valentino Sy

(The Philippine Star) | Updated June 3, 2013 - 12:00am

Last week, we presented the fundamental reasons why we believe the peso has topped against the US dollar. These are the strengthening of the US dollar and the weakness of the yen. We enumerated 12 reasons why we think the dollar will continue to strengthen. We also said that Abenomics will keep the yen weak as Japan tries to recover from a two decade-long economic stagnation, and that the peso should weaken with the yen (see Peso Tops Out, May 27, 2013).

In just five days since making that call, the peso lost 2.52 percent against the yen, 2.25 percent against the euro and 1.59 percent against the US dollar.

We now present the technical reasons why we think the peso has reached an important top against the US dollar.

Resistance level at 42 was decisively broken

In our article last week, we said that after eight long years the peso has topped out, or in other words, the USD:PHP rate has bottomed. This happened when the USD:PHP rate hit 40.55 last March 2013.

Subsequently, the USD:PHP rate broke above its initial resistance level at 41 in April this year. And last week, it broke decisively above the resistance level at 42, reaching an intraday high of 42.63 last Wednesday before closing at 42.26 on Friday. The USD:PHP rate continues to trend higher and after more consolidation, the next level of major resistance is now seen at 44 (see chart below).

Source: Wealth Securities Research

Moving averages were breached

Aside from breaking above the resistance level at 42, the USD:PHP rate also breached the 50-day, 100-day and 200-day moving averages. In technical analysis, moving averages smooth the price data to form a trend following indicator. Technicians use 50-day, 100-day and 200-day moving averages as guides to the short-term, medium-term and long-term trends, respectively. The USD:PHP rate going above these moving averages reinforces our call that the peso has indeed topped out against the greenback.

Source: Wealth Securities Research

Downtrend line poised to be broken

The weekly chart below also shows that the peso is attempting to break above the long-term downtrend line established since we called the TOP in the USD:PHP rate back in 2005. If it convincingly breaks, it confirms that the range for the next few years would be 42 to 44.

Source: Wealth Securities Research

Pull back after huge gains since 2005

One can also make an argument that the peso is just pulling back or giving back some of its gains since bottoming out against the US dollar in 2005.

Note that since we called the top in the USD-PHP rate back in 2005 (see Peso: The Strongest Currency in Asia, Oct. 24, 2005), the peso has gained 26.9 percent against the US dollar. In fact, the peso has gained against all major currencies with the exception of the Australian dollar.

The peso also performed strongly against its Asian counterparts over the same period except for the Thai baht. It has appreciated as much as 39.3 percent against the Indian rupee and 29.5 percent against the Korean won since October 2005.

Source: Bloomberg, Wealth Securities Research

From a long-term perspective, the peso appears to be giving back just a small part of the huge gains it has registered against most currencies since 2005. Against the US dollar, it has given back just 4.2 percent since topping out at 40.55 last March, which is miniscule compared to its 26.9-percent gain against the greenback since 2005.

Healthy and not a cause for concern

Most people have been accustomed to the peso appreciating for the past eight years. That’s why the depreciation of the peso last week caused a lot of questions and surprise.

BSP Gov. Tetangco said last week that the peso trading at these new levels “is still healthy and should not be a cause for concern.” He also added that “the wider trading range does not alter the fundamentals of the peso.”

Meanwhile, Finance Secretary Cesar Purisima added that the peso is dictated by market forces. He remarked: “So long as the changes in the exchange rate are smooth and within the band of competitiveness vis-a-vis our peer currencies, whatever the market sets it at should be the right rate.”

We could not agree more.

Back to the sweet spot

One of the major rules of technical analysis says that “once a resistance level is broken, it becomes a new level of support.” This means that the previous resistance level at 41.80 to 42 that was broken last week now becomes support.

The USD:PHP rate is now expected to trade back to its “sweet spot” between 42 and 44 (see Peso’s Sweet Spot, Jan. 30, 2012). Technical analysis reinforces the view that the peso will trade at these levels in the next few years.

(Charts and resources at http://www.philstar.com/business/2013/06/03/949401/peso-back-sweet-spot)

Sam Miguel
06-04-2013, 08:01 AM
Stocks continue to plummet

Philippine Daily Inquirer

8:29 pm | Monday, June 3rd, 2013

Philippine stocks plummeted Monday, mirroring the declines in the region, as investor concerns grew that improving economic prospects in the United States might encourage the Federal Reserve to turn to tightening measures.

In contrast, the peso strengthened by half a percent to P42.055 against the dollar.

The benchmark Philippine Stock Exchange index (PSEi) breached several key support levels to end lower by 258.57 points, or 3.68 percent, to 6,763.38. The benchmark index has lost more than 8 percent since its May 15 record high. However, year-to-date, it was still up more than 16 percent.

“It’s generally a foreign selloff and then there’s speculation on what the US Fed will do next,” April Lee-Tan, research head at stock brokerage firm COL Financial Group Inc., said in an interview. “So it’s these global factors driving the market now.”

Technical indicators also pointed to the PSEi being “overbought” in recent months, partly due to the large amounts of liquidity in the system and the continuous “positive” attention the country has been receiving.

Data from Bangko Sentral ng Pilipinas, meanwhile, showed that the peso reached its weakest point at 42.50. Trading volume reached $1.47 billion, higher than the $1.26 billion worth of trades the previous trading session.

The local currency fell to the 42:$1 level last week following concerns over the flight of foreign funds from emerging markets to return to the recovering economies of the developed world.

The Philippines has received two investment-grade ratings from major debt watchers, Standard & Poor’s Ratings Services and Fitch Ratings, over the last two months. Moves by the local central bank to reduce rates on its special deposit accounts also helped shift money into stocks, Tan said.

Tan warned investors to wait for a support base to form before jumping back into the market. That said, she noted that the Philippines’s fundamentals remained intact. “The fundamental story remains strong. Given the magnitude of the rise over the past few months you can expect steep declines,” she said, adding that COL Financial was maintaining its 7,400 yearend target for the index.

Data from the PSE showed that all sub-counters ended in the red, led by a 4.96-percent decline for the property sector, followed by 3.8 percent for financials and 3.72 percent for mining and oil.

Ayala Land Inc., the session’s 7th most actively traded stock, fell 7.26 percent. SM Prime Holdings Inc., which is merging with other property units of tycoon Henry Sy, lost 6.46 percent. Miguel R. Camus and Paolo G. Montecillo

Sam Miguel
06-10-2013, 11:05 AM
Investment risks

Philippine Daily Inquirer

9:41 pm | Sunday, June 9th, 2013

Be wary about investing in stocks. Like any other activity where one can lose money, the stock market is not for the faint of heart. The usual cycle runs like this: An economic boom emerges on the horizon, big investors bet early and accumulate stocks, prices start a dizzying climb, small investors join the fray and buy stocks somewhere near the peak, big investors who bought early start selling at a profit, and—with more sellers than willing buyers in the market—prices tumble. More often than not, small investors are left holding on to stocks bought expensively because they knew very little to begin with, many of them merely lured into playing by relatives or friends of friends who had bragged about making a “killing” in stocks.

Seasoned investors or players make money in stocks, but many others take a hit in varying amounts. Small investors can lose a few hundred to a few thousand pesos. Bigger investors can lose by the hundreds of thousands up to a few million pesos. Economies, on the other hand, can lose billions of dollars. Here’s an interesting piece of data on the magnitude of market losses at the macroeconomic level. Last week, it was reported that Japan’s stock market capitalization was down $577 billion since the high of May 22. This is more than double the Philippines’ $260.24 billion (P10.93 trillion) market size at end-2012. Locally, the market capitalization of companies listed on the Philippine Stock Exchange (PSE) has fallen to P10.78 trillion as of last Friday.

The reason for the current global decline in emerging markets is that the improvements in US employment and housing led institutional investors to believe that the Federal Reserve Board (the central bank of the United States) will reduce its so-called quantitative easing measures aimed at resuscitating the world’s biggest economy. Prospects of an economic recovery in the United States are starting to sap funds away from emerging markets.

Brokers and analysts are convinced that the market’s bull run will extend at least all the way to the end of the Aquino administration in 2016. What they are not saying is that a lengthened market climb is usually interrupted by declines in prices—usually referred to as “corrections”—when those who have made substantial paper profits for buying earlier cash in on their gains. Some of these “corrections” may be marginal, but others can be as sharp as the one experienced by the local market in the past three weeks.

The local stock market has been rising since 2009. The four-year rally has driven the PSE index’s valuation to 19 times the estimated profits for 2013, reportedly the highest price-earnings ratio (PE) among emerging and developed markets. This compares with the five-year average PE ratio of 13 times for local stocks.

The PSE index or PSEi is an indicator of the general movement of stock market prices. It ended 2008 at 1,872.85 points. In 2009, the PSEi gained 63 percent to end the year at 3,052.68. It added another gain of 37.6 percent in 2010 as it closed at 4,201.14. The following year was not as exciting, with the PSEi adding only 4.1 percent to close at 4,371.96. It came back strongly last year, adding 33 percent to end 2012 at 5,812. Last January, the PSEi began a rapid rise to a peak of 7,392.20 on May 15, or a gain of 27.19 percent in less than six months. From the end of 2009 to the stock market bull run’s peak last May 15, the PSEi gained a whopping 294.7 percent. The downturn in the second half of May through early June has cut the PSEi to 6,701.95, although this was still up by 15.3 percent from end-2012.

It is true that many people will continue to make money by investing in stocks. Returns from stock investments can beat yields on bank deposits anytime, or even the rates offered by the relatively safe government securities. But there are risks involved. A company with very solid credentials today can collapse under the weight of an impending economic downturn tomorrow. The 1997 Asian financial crisis and the United-States-led subprime crisis in 2008, which dragged the global economy to a recession, are testaments to this fact.

Many stockbrokers are saying that the recent sharp downturn is a “perfect opportunity to come in,” but would-be investors really need to be most discerning. Seeking expert advice from licensed and reputable stockbrokers is the best way to start.

Sam Miguel
06-18-2013, 09:30 AM
Turbulent times

Philippine Daily Inquirer

11:05 pm | Monday, June 17th, 2013

Financial markets worldwide have exhibited extremely erratic behavior in the past two weeks. Locally, the stock market posted last Thursday its worst performance since the subprime crisis in 2008. The peso was similarly battered, falling from a high of 40.83 to a dollar to breach the P43:$1 mark (many analysts and economists had predicted the opposite). The local bourse hit its lowest level this year. The benchmark Philippine Stock Exchange index plunged 442.57 points (or 6.75 percent) in just a day last Thursday to 6,114.08. It was the biggest single-day loss since Oct. 27, 2008, when the local price barometer tumbled 12.27 percent just a month after investment banking giant Lehman Brothers collapsed, triggering the world’s worst financial crisis since the Great Depression at the end of the 1920s.

With the benefit of hindsight, analysts said the market had risen too fast and too soon. The PSEi peaked at 7,403.65 last May 15, a level earlier forecast to be hit by 2014. As a stockbrokerage pointed out earlier, “valuations have become a concern due to positive sentiment that drove market levels to yearend expectations all by the first quarter of the year, outperforming most global markets.” The market’s bull run began in early 2009. So far, the PSEi has retreated by nearly 15 percent from that peak in May. A pullback exceeding 20 percent is usually interpreted as a reversal of the trend to a bear market. But since the start of the year, the index is still ahead by about 8 percent.

The downturn is not peculiar to the Philippines. Also last Thursday, stock markets in Asia fell heavily, with prices in Bangkok and Jakarta mirroring a plunge of 6.35 percent on the Tokyo bourse, bringing Japan’s key stock index down more than 20 percent from its recent peak.

The reason for the global uneasiness is the speculation that the US Federal Reserve Board will scale back its easy-money or low-interest rate policy. Last May 22, Fed Chair Ben Bernanke told the US Congress that the Fed might scale back stimulus efforts if the US employment outlook continued to improve.

The Fed has been buying bonds to push down market interest rates to near-zero levels. Theoretically, low interest rates should spur lending to productive activities that, in turn, should lift the overall economy. The Fed does this by injecting liquidity into the system through the purchase of $85 billion worth of securities a month. Speculation that the Fed may wind down this stimulus—and consequently lead interest rates higher—has led fund managers to dump emerging-market stocks and buy US assets. For instance, foreigners were net sellers at the local bourse last Thursday by P1.65 billion. This was the same picture in emerging markets from Asia to South America.

As foreign investors exchange the proceeds from the sale of their emerging-market stocks to dollars, demand for the greenback rises, thus leading to its appreciation. This is why the peso and other currencies have lately been depreciating in value. A rising dollar and higher US interest rates have adverse effects on developing economies in terms of capital flight. In fact, monetary authorities of countries like Indonesia have raised their domestic interest rates to stem the outflow of capital.

Top Fed officials are meeting this week in Washington to assess the state of the US economy and tackle interest rates and other policies. Most economists expect US interest rates to remain steady. Bernanke was reported as saying that the Fed would continue efforts to stimulate the economy until further improvements in the unemployment situation. Last week’s US jobs data provided some calming effect on global markets as these suggested that a recovery in the world’s biggest economy was not strong enough. This was behind the weakening of the dollar last Friday after gaining much of the week.

Volatile events in financial markets like the one seen this June are usually temporary. In the longer term, economic fundamentals determine the path that the country will take. Economists and market analysts agree that the Philippines has strong economic fundamentals—billions of dollars in remittances from overseas Filipinos, an improved fiscal position of the national government, huge foreign reserves of almost $85 billion against total long-term liabilities of $35 billion, and a low inflation that gives room for accelerated public and private spending. Growth will thus rely on domestic demand and consumption. Meanwhile, these are turbulent times for financial markets. The Philippines and other emerging economies just need to brace themselves for a very rough ride ahead.

Sam Miguel
06-18-2013, 10:37 AM
Fair market value redefined

TOP OF MIND

By Glenn Raymond O. Paradela

(The Philippine Star) | Updated June 18, 2013 - 12:00am

The Bureau of Internal Revenue (BIR) has issued Revenue Regulations No. 6-2013 (RR 6-2013), amending certain provisions of Revenue Regulations No. 6-2008 (RR 6-2008 ) entitled “Consolidated Regulations Prescribing the Rules on the Taxation of Sale, Barter, Exchange or Other Disposition of Shares of Stock Held as Capital Assets.”

Specifically, the new regulation, published last April 22, 2013, amended the definition of fair market value (FMV) of the shares of stock being sold where the shares are not traded through a local stock exchange. The definition is critical in view of the possible imposition of the donor’s tax on top of the capital gains tax (CGT). Under the Tax Code, in case of sale of shares of stock not traded in the local stock exchange, the net capital gains will be subject to a CGT of five percent on the first P100,000 and 10 percent on the amounts in excess of P100,000. However, in the event the selling price is less than the FMV of the shares of stock, the seller is deemed to have received a gift. The excess of the FMV over the selling price will be considered as taxable gift subject to donor’s tax. Hence, it is common for taxpayers selling shares of stock not traded through the local stock exchange to use the FMV as the selling price to avoid the donor’s tax.

However, with RR 6-2013, the question now is how to determine FMV. Under the old regulations (RR 6-2008 ), the FMV of shares of stock not traded in the local stock exchange would be the book value of the shares as shown in the audited financial statements (AFS) nearest to the date of sale. On the other hand, according to RR 6-2013, the value of the shares of stock at the time of the sale would be the FMV. In determining the value of the shares, RR 6-2013 prescribes a valuation procedure that changes the stated values of a company’s assets and liabilities to reflect its current fair market values. RR 6-2013 states that the Adjusted Net Asset should be used whereby all assets and liabilities are adjusted to FMV. The difference between the total FMV of the adjusted assets and the total FMV of the adjusted liabilities is the indicative value of the equity (what the business is considered to be worth).

In the event the assets of the corporation consist of real property, the appraised value at the time of sale should be the higher of – FMV as determined by the commissioner of Internal Revenue, or FMV as shown in the schedule of values fixed by the provincial and city assessors, or FMV as determined by an independent appraiser.

With the new definition of FMV in place, it is expected that higher taxes would be collected on the sale of shares of stock not traded in the local stock exchange.

But this situation is not that simple because the determination of FMV under RR 6-2013 raises a lot of questions with respect to sufficiency and timing of documents to establish FMV. When a taxpayer sells shares of stock not traded in the local stock exchange, he needs to get a Certificate Authorizing Registration (CAR) from the proper BIR office. The CAR is required to have the sale recorded in the company’s Stock and Transfer Book.

To get the CAR, the taxpayer would have to submit to the BIR documentary requirements such as the Deed of Absolute Sale, latest AFS, and the CGT and Documentary Stamp Tax Returns. Based on RR 6-2013, it appears that he would also need to present the Tax Declaration, Zonal Valuation and independent appraiser’s report covering the real property owned by the company to establish FMV. In this respect, in the absence of the independent appraiser’s report, would the Tax Declaration and the Zonal Valuation of the real property be sufficient to establish FMV? If the independent appraiser’s report is a requirement, who would shoulder the costs which are most likely not cheap? It could be that this requirement imposes additional burden to the selling stockholder to pay for the report. With respect to personal property, RR 6-2013is not clear if the AFS of the company is sufficient to establish its FMV.

As to the timing of the document, would the documents needed to establish the FMV be as of the time of sale?

What could add to the confusion is that there seems to be a view within the BIR that the valuation under RR 6-2013 applies only to certain properties.

To answer these questions, the BIR may have to issue clarifications; otherwise, RR 6-2013 may impede sales transactions that could impact on the financial viability of the company. When fresh capital is required by the company, and the solution is for an existing shareholder to sell to a new investor, a problem could arise if the BIR cannot agree on the valuation of the company’s shares in view of the valuation issues caused by the implementation of RR 6-2013. One could say then that redefining matters is creating gray areas.

Glenn Raymond O. Paradela is a supervisor from the tax group of Manabat Sanagustin & Co. (MS&Co.), the Philippine member firm of KPMG International.

Sam Miguel
06-25-2013, 08:52 AM
Stock market nears ‘bear’ territory

PSEi already down by 19% from peak recorded in May

By Doris C. Dumlao, Paolo G. Montecillo

Philippine Daily Inquirer

9:25 pm | Monday, June 24th, 2013

Prospects of rising US interest rates and a slowing Chinese economy on Monday dragged the local stock market barometer below the 6,000 mark, bringing the local bourse on the brink of returning to a “bear” market.

The main-share Philippine Stock Exchange index (PSEi) slumped 211.12 points or 3.41 percent to close at 5,971.05. The index has pulled back by about 19 percent since hitting the peak of the recent bull run at 7,400 in mid-May.

A market is technically deemed having reversed from a “bull” to a “bear” market when it has retreated by 20 percent from the peak.

As global funds continued to exit emerging markets, the peso also closed weaker against the dollar Monday. The greenback continued to gain strength following signals that the American economic recovery is gaining traction, prompting the US Federal Reserve to signal that it would soon end its aggressive bond-buyback activities.

At the local stock market, all counters were in the red, led by the financial (-4.69 percent) and mining/oil (-4 percent) counters.

With the PSEi breaking down the 6,000 support, this puts the 5,500-5,800 levels at risk, according to Banco de Oro Unibank chief strategist Jonathan Ravelas.

“We’re just correcting excesses that we saw,” said Jose Vistan, head of research at AB Capital Securities.

Vistan said he believed the PSEi would be able to establish a base at around 5,600 to 5,700 at which local valuations would go down in line with comparable markets in the region at around 15x price to earnings (P/E). When the index hit a peak of 7,400, this represented a P/E ratio of about 22x, which meant that the market paid 22 times the amount of money they expected to make in this market.

“If you look at underlying fundamentals and we remove (excess liquidity from) QE (quantitative easing of the US Fed), we’re not fundamentally bearish. We may turn bearish technically, but we’re far from bearish fundamentally,” Vistan said. “This is just a consequence of having overdone it. The run-up to 7,400 was overdone as we moved ahead of fundamentals.”

The PSE said the recent selldown was a result of an “overreaction” to global developments. “There is a disconnect between good local economic fundamentals and the short-term market psychology. The explanation that investors were reallocating back to developed markets is not exactly accurate, with real movements going from the equities market into cash in a period of high volatility,” PSE president Hans Sicat said.

“Looking at the bigger picture, the recent index setback is not equivalent to degrading the strong fundamentals. We believe our listed companies will remain resilient and will continue to find ways to take advantage of the favorable local macroeconomic environment,” he added.

The PSE reported Monday that cumulative earnings of listed firms surged 23.3 percent year-on-year in the first quarter to P163.42 billion on the back of an average revenue growth of 15.4 percent to P1.21 trillion.

“The phenomenal income performance of listed companies has been the main driver of the stock market’s growth this year while also providing a firm basis for investor optimism on the prospects for listed companies moving forward. More importantly, we believe that expansion of this magnitude should have contributed in a big way to the impressive growth rate of the economy so far this year,” Sicat said.

Value turnover amounted to P8.56 billion. There were 165 decliners that overwhelmed 17 advancers while 34 stocks were unchanged.

The day’s biggest index decliner was MWC (-11 percent). The company’s bid to enter the Indonesian market is at risk due to signals from the leaders of Jakarta to instead nationalize the capital’s water concessions.

Other big index decliners for the day were Bloomberry and MPI, which fell more than 8 percent while Belle lost 7 percent. Megaworld, Metrobank and Philex all slid by 6 percent while AGI, Jollibee, Belle and AC faltered by more than 5 percent.

Meanwhile, the local currency looked ready for another week of losses after it retested the 44-to-a-dollar level Monday. The peso lost 2.13 percent last week.

The currency traded as low as 43.95 to $1 before closing at 43.84 Monday, lower than the 43.72:$1 close last Friday. The peso opened the day at 43.85 and was at its strongest at 43.61 to $1. Trading volume was flat at $1.08 billion, just slightly ahead of last Friday’s level.

Mel
06-25-2013, 11:49 AM
as of today the index is back to 5,800

Sam Miguel
06-26-2013, 09:48 AM
^^^ I've often wondered, when is it a trend (Bullish or Bearish) and when is it a correction (upward or downward)...?

Sam Miguel
06-28-2013, 08:52 AM
Filipinos as money ‘experts’: Clueless on bonds, stocks, loans

By Doris C. Dumlao

Philippine Daily Inquirer

4:47 am | Friday, June 28th, 2013

MANILA, Philippines—One out of every five Filipinos from the middle to upper income groups claims to be an “expert” in money matters. But a global insurance giant recently found that members of these classes perform poorly in a basic financial literacy quiz.

Sun Life of Canada’s latest annual study of lifestyles, attitudes and relationships (Solar) showed that Filipinos were typically confident about how they manage their finances, with 20 percent considering themselves an “expert” and sometimes even a “specialist.”

However, test scores from the financial literacy quiz given to a group of respondents showed that only 8 percent got a score of more than 80 percent.

The median score was 50 percent, nowhere near the “passing” mark.

Nobody among the respondents scored more than 90 percent, said the research report that Mylene Lopa, Sun Life Financial Philippines chief marketing officer, presented to the media on Thursday.

The study was based on a sample of 1,100 respondents from the Classes A, B and C across the country with a monthly household income of P30,000 and above.

The respondents were between 23 and 55 years of age and were interviewed face to face in the first quarter of the year.

A 16-question financial literacy quiz was introduced this year to measure the level of awareness and knowledge of basic financial concepts and products, and the capacity to apply such concepts.

Paradox

The wide gap between Filipinos’ self-perception and actual financial literacy level is cited by Sun Life as the paradox of financial literacy.

When respondents were asked how they defined financial security, the top answer was “having enough bank savings.” Eight out of 10 Filipinos were relying on bank savings, overlooking other options such as life insurance and investments, the research report said.

“Putting one’s savings in a bank account remains prevalent and such an approach reveals how Filipinos prepare or underprepare for tomorrow. One’s money is intact in a bank account but with so little growth, or even negative real growth, there is doubt if it can ensure one’s financial security,” the report said.

Eye-opener

Since the Solar study was launched five years ago, it has been an “eye-opener” for Sun Life on designing its financial literacy program, said Sun Life Financial Philippines president Riza Mantaring at a briefing that presented 2013 results.

“The report showed us many interesting insights. For instance, Filipinos seem confident in their knowledge of money matters but in fact, lack knowledge of basic financial concepts and how to properly prepare for their future needs. These findings strengthened Sun Life’s resolve to continue, expand and enhance its financial literacy campaign,” Mantaring said.

Optimistic people

The study found that Filipinos were an optimistic people. Asked how they expected their financial situation to change in the next three to five years, 87 percent expressed a positive outlook.

The report said this optimistic outlook was a probable outcome of the robust macroeconomic backdrop. “The Philippines is moving up, at a time when other countries are reeling from weak economies, political backlash and widespread unemployment,” it said.

While the study revealed a lack of knowledge of some financial concepts, Mantaring said it did indicate an improving attitude toward life insurance. “Life insurance is now considered by a third of the respondents a priority purchase for the next two years,” she said.

Priorities

Asked about their priorities in the next two years, the respondents gave the following answers: opening a business (51 percent); purchasing a parcel of land (45 percent); and getting life insurance (39 percent).

Other priorities were an education plan (39 percent), a car/vehicle (37 percent), gadgets (37 percent), health insurance (37 percent), house/condominium (37 percent), house renovation (35 percent) and durables/appliances (27 percent).

While 80 percent prepared for the future by putting savings in a bank, 30 percent were planning to put up a business. Only 20 percent were planning to get a life insurance and 10 percent were planning to invest.

“Filipinos must be encouraged to learn the basics of proper financial planning and explore a wider array of financial instruments to help them achieve their goals and aspirations,” the research said.

Quiz coverage

In the quiz, Filipinos were mostly knowledgeable about topics relating to investment, annual interest rate, credit card, asset, life insurance, real estate, debt, savings accounts and current account. A majority answered questions on these topics correctly.

They typically scored poorly in questions relating to preneed plans, stocks, loans, mutual funds, inflation, a healthy budget and bonds.

Multiple choices were given for each question.

———

The Quiz included questions such as the following:

1. Which of the following statements about inflation is false ?

a. Higher inflation means higher prices of consumer goods

b. Purchasing power is lower if inflation is high

c. As inflation rises, every peso will buy a fewer amount of goods.

d. None of the above

e. All of the above

2. The formula for a healthy budget should be …

a. Expense + income = Savings

b. Income – savings = Expenses

c. Income – expenses = Savings

d. None of the above

3. If a savings account has an annual interest rate of 2 percent, how much will a P100,000 deposit earn after a year?

a. P2

b. P20

c. P2,000

d. P20,000

4. Which of the following can be considered an asset?

a. Cash

b. Credit

c. Utility bills

d. All of the above

e. None of the above

5. Which of the following can be considered a debt?

a. Insurance

b. Loan

c. Real estate

d. All of the above

e. None of the above

6. Which of the following can be considered an investment?

a. Stocks

b. Taxes

c. Revenue

d. All of the above

e. None of the above

Answers: 1) d; 2) b; 3)c; 4)a; 5)b; and 6)a

Sam Miguel
07-10-2013, 09:13 AM
How to make money in a falling market

By Henry Ong

Philippine Daily Inquirer

4:06 am | Wednesday, July 10th, 2013

Question: The market has fallen again after a short recovery last week. It seems like this will continue for some time because there is not much buying activities in the market lately. I have some extra cash to invest and I don’t know if I should wait for the market to fall further or to buy now. Can you advise me?—Ruby Suan by e-mail

Answer: There is nothing wrong about being positive that the market will recover soon, but you also have to recognize that the general trend may have already reversed from bullish to bearish. The market has entered the bear territory after the index has fallen by over 20 percent from the record high of 7,403 to the recent low of 5,678.

I mentioned in a previous column published last January that a bull market would normally last for three to four years, and this year could be the end of the bull run since this would be the fourth year. True enough, the market peaked last May and the trend has reversed. It may take some time, probably several months, before the market starts to pick up again.

Some people who apparently are still in denial call the current downtrend a correction when in fact it is the other way around. When the general trend is downward, any market rally is considered a correction. It is temporary and short. Once the market has recovered, the downtrend continues. This is exactly what is happening now in the market.

Why has our market turned bearish despite the good fundamentals? Improving economic outlook in the United States and prospects of higher fixed income yields have attracted foreign investors to pull out of our market and send their funds back home. Without strong buying support, the market becomes highly vulnerable to selling pressure.

In the absence of massive selling, the market may move sideways on a downward bias until another set of negative developments trigger a fresh round of heavy selling. Current downtrend should initially hold the market at the 6,100 area but should eventually test the previous low of 5,678. Once this is broken, it will be anybody’s guess. Hopefully, the market will be range-bound at these levels and consolidate.

The prospect of a falling market should not discourage you from investing. In fact, this is the best time to buy stocks. This is the season to bargain-hunt for stocks that offer good value. If your allocated investable fund for stocks is limited, you should rejoice when stock prices fall because you can buy more shares.

In a falling market like this, always prioritize the blue chips because they will be the first to get back fast when the market recovers. Normally, blue chips are reputable stocks that belong to the PSE index, but beware that not all stocks there are really blue chips. Choose your stocks carefully. Ideally, they must have reliable earnings track record, good management team and healthy financial cash flows.

If you want to play defensive, buy stocks that offer high dividend yields. As share prices fall, dividend yield rises. Not all listed companies in the stock market can afford to pay dividends. Buy stocks that have good dividend pay-out history. You may want to target dividend yield by buying stocks at a particular price range.

A good example here is Meralco. This stock pays cash dividends at least twice a year. In 2011, it paid total cash dividends of P7.80 a share. Last year, it paid slightly higher cash dividends of P8.10 a share. This year, it already paid cash dividends of P6.10 for the first half alone and is expected to pay another one before the end of the year.

Let’s say Meralco will pay the same cash dividends as last year at P8.10, although it is highly possible that it will pay higher dividends given its expected 22 percent earnings growth this year, the dividend yield of the stock at current price is about 2.5 percent per annum. This yield is much better than putting your money in the bank or SDA that earns minimal return of less than 1.5 percent a year.

When the market falls further, this stock may probably fall below P300 soon. Let’s say you pick this up at its recent low of P288, you would get a dividend yield of 2.8 percent, which is not bad at all as a guaranteed cash flow in this low interest rate environment, not to mention that the stock will appreciate eventually given its cheap valuation.

Other stocks that you can watch out for that offer potential high dividends are Aboitiz Equity Ventures (3.2 percent), Aboitiz Power (5.2 percent), Globe Telecom (4.4 percent) and PLDT (4.3 percent). These dividend yields are based on current share prices and can potentially go higher if stock prices fall.

There are other stocks that can be good candidates for investment, but make sure that they have at least three years of dividend payment record. Spend time to research the company you want to buy. What is the dividend policy of the company? How often does the company distribute cash dividends in a year? Have they increased cash dividends over the years? How stable is the company’s earnings to support annual cash dividends?

This may be a good time for you to build your stock portfolio. Start to build your core holdings with blue chips that have high dividend yields. Accumulate stocks at targeted price range. Use a chart to guide you at the prices you can buy the stock. Celebrate when the stock prices fall. The lower the share price, the better opportunity for you.

Sam Miguel
07-12-2013, 09:49 AM
Stocks get fresh boost from rosier IMF outlook on PH

Philippine Daily Inquirer

10:57 pm | Thursday, July 11th, 2013

Local stocks on Thursday received a fresh boost from the International Monetary Fund’s decision to upgrade its economic growth outlook on the country, and the US Federal Reserve chair’s announcement that the United States needs to sustain its monetary stimulus.

The main-share Philippine Stock Exchange index jumped by 99.18 points, or 1.57 percent, to close at 6,407.36.

All counters closed up, but the biggest gainers were the industrial and property counters, which both rose by over 2 percent.

Value turnover improved to P7.15 billion from that of the previous day.

There were 106 advancers against 40 decliners, while 43 stocks were unchanged.

Risk appetite on local equities improved after IMF upgraded anew its growth forecast on the Philippines to 7 percent, from 6 percent. But the institution took a dimmer view of the global economy and even downgraded other emerging markets in the region.

Fed chair Ben Bernanke also had a hand in lifting the local stock market when he said that US regulator would need to continue its stimulus program because of the low inflation and high unemployment in the United States.

The day’s top index performer was Petron (+7.01 percent), followed by Bloomberry (+5.82 percent). FGEN, ALI and DMCI were all up by over 4 percent while Philex, AC, URC and Megaworld gained over 3 percent.

MWC, battered by concerns on consumer complaints against pass-on charges, rebounded by 2.73 percent. Doris C. Dumlao