Manila, Philippines

PSE Fell Below 6000, Erased 2013 Gains: Best Time to Learn

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Down from the hill…

Not referring to the Ateneo alma mater, but instead to our PSE stock market.  Down from the chocolate hills since May of this year. 

And we thought we were bound for Mt. Apo.

Maybe, but for now the market needs to cleanse itself and catch its breath. Or worse who knows maybe the bear is now in charge?

Just some run down on some major issues hounding our PSE, in spite of some rebound the past few days.

US – Syria War

A cause of concern for all of us is the possible war between US and Syria. Though for the past few developments, it seems that there is lesser probability for this war since US confirmed that it is willing to “give diplomacy a chance” while Syria seems to be heeding the advice of Russia to surrender its chemical weapons to UN. How are we affected by the way? Should it occur, much higher oil prices can be expected (coming from Middle East) due to hampered supply (and possibly increased demand from those involved in the war), thereby hurting the economy of oil importing countries (such as the Philippines). Quick economics huh? Plus of course any other military action against US allies (and yes, such as once again the Philippines), hopefully none.

Quantitative Easing
Ahh the much discussed and second-guessed tapering of QE. Admittedly, this has caused much correction in our markets, as hot money kept on flowing out of our country, and back to the homeland (that is why more FDI is highly encouraged).  Mainly because this overflowing supply of money for US companies may soon stop, and also because this is a sign that US economy is starting to improve, based on Fed assessment. So if we’re all back to reality with limited money supply, where to best invest it but in the higher investment grade countries right, such as the U-S of A? And we’re not yet in that level. I hope that the correction the past months has already started to price-in the future developments on QE.
“Guilty By Association”
Not referring to the pictures of who’s who together with JLN circulating everywhere. Rather, another market driver that COL Financial pointed out is that PSE was also hampered given the weaker economic data that our neighboring countries announced. Of course, if there’s slowdown in parts of the region, a quick reaction will be to treat the whole region affected. In spite of this, Philippines’ GDP forecast was in fact upgraded whereas those of our ASEAN neighbors were downgraded. COL Financial mentioned these keys as to why the country is less vulnerable to external threats affecting our neighbors:  (1) less reliance on commodity exports  (30% of GDP for Philippines, average of 62% of Indonesia, Thailand and Malaysia); (2) OFW remittances; (3) current account surplus.
Can Get Enough (of) Pork
Sorry but had to include this. Admittedly, some companies, analysts and investors also cite this as partial reason. It is true that increased vigilance and involvement of Filipinos should be commended and we should further increase vigilance, yet on the other hand, this is also cited as potential reason to slower turnout and progress of government projects, for fear of being audited and cited. This should not be used as excuse though since government projects, to begin with should be above board. Nonetheless, offices are rumored to be being too extra careful in signing anything.
Best Time
Most people and investors have remained out of the market, with traded volumes remaining thin. Small time players and newbies are most probably stricken with fear (or worse, trauma) during this times of troubled bloody markets. In times like this, chances of error is very high, it is very difficult to choose and trade, whereas in times of bullish runs, it seems like every stock you buy just goes up and up.

If we can derive some positive consequence in this market’s current events, I would say that this is the best time to learn. Best time to learn, on our own, observe the market, and likewise to learn from the experts. Best time to study and weigh their analysis, whether it’s aligned or not with our trading and investment objectives. 

While the market is still way down, this is the best time to study stocks recommendations from Pinoy Investors and Truly Rich Club.

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