Investing in the Philippine Stock Market

APRIL 28, 2000

Market Review

All eyes today were on PLDT as the issue posted its fifth consecutive drop, and was the most actively traded issue with over P270mn in trades. With a P40 drop, the stock closed at P740; a price the issue hasn't reached since September 1998 when the stock market posted steep declines. The issue which has a 14.81% weight in the Phisix thus led the index in its 21.80 point decline. It also affected the general sentiment as declining issues numbered 67, or almost double the 34 gainers. Index issues in particular sympathized with PLDT with only five ones managing gains. Concerns for PLDT generally revolve around poor first quarter earnings for 2000 as far as market talk goes. Versions range from speculation that Globe's impressive subscriber base growth translated into lost market share for Smart or the growing popularity of Voice over IP (VOIP) services which would eat up PLDT's international call revenues.

Another blow of the market was the announcement of lower earnings by Ayala Corporation for the first quarter of the year. Profit was at P1.4bn from last year's P1.88bn. This was mainly due to higher financing charges that are related to the acquisition of Far East Bank and Islacom. BPI itself had a lower income estimate at P1bn from P1.03bn last year, following flat loan demand for the year. AC likewise approved an increase in the company's authorized capital to P26bn from P20bn to pave the way for the issuance of preferred shares. AC dropped 1.05% to P9.4, while BPI lost 1.07% to P92.50.

Erstwhile market star ABS-CBN announced weaker earnings for the first quarter, citing higher expenses due to an across the board hike in wages and talent fees. Profit was 2.5% weaker to P418.7mn. The company also disclosed that it is looking at 15.5 hectare Rockwell property as a location for its future studios. ABS is contemplating adding a theme park concept for the project as well. ABS shed P0.50 to P48.50.

Likewise causing jitters to the market was the momentary closure of Urban Bank following heavy withdrawals by depositors during the past month. What apparently triggered the panic was the downgrade of URB into an ordinary commercial bank from a universal bank due to its failure to comply with the BSP's capital requirement for universal banks. News also relate the company's liquidity crisis with its exposure to property companies. This has led to a wild speculation regarding the state of other banks. Apart from these localized issues, the market generally remained listless with turnover barely breaching the P1bn mark.

Market Outlook

The first streak of corporate earnings are actually disappointing considering that a recovery was expected. We already know that ABS and MER have below-par earnings. Rumors abound that TEL and JFC will likewise post poor earnings. Thus, apparently there would be more room for the index to drop, and this fact can only be exacerbated by the looming problems in the banking industry and fears of a 50-basis point hike by the US Fed. If we're lucky, investors will merely shy away from the market, and the drop will not be supported by heavy volumes.

APRIL 27

Pera o Bayong

I attended the ABS-CBN stockholders' meeting earlier, which is why I'm home this early and not at work. I haven't studied the company yet, nor is it really assigned to me, but since I have the annual report I might as well share a few insights. But not just yet. I just have to share two funny things about the meeting:

1) There was a middle aged lady who actually proposed that the stockholders' be chosen as Pera o Bayong contestants; and

2) A time-monopolizing stockholder who had the guts to ask Chairman Lopez if he was qualified as a back-up anchor man.

And now I've heard it all...

APRIL 26

Bore Me Bebe

In as many trading days passed for the week, the market again failed to breach the P1bn mark in terms of value turnover. Consistently, the index has dropped as well while trading in a tight band (today at 23 points). As the holiday hangover should be over by now, thin volumes now merely reflect how disgruntled investors are. Interest was focused on very few issues, but primarily on PLDT which closed unchanged at P780. TEL's first quarter earnings are reportedly disappointing given optimistic forecasts for the company for the year. One speculation stemmed from the impressive jump in Globe's subscribers for the first quarter, year-on-year. This may imply stolen market share from both Smart and Piltel, which would reflect on TEL's earnings. Uncharacteristically though, PLTL proved unaffected and was in fact today's best gainer with a 14.29% spike in its price to P1.28. Globe on the other hand acted in a more predictable manner, as it rose another P0.50 to P15. The issue is now up 33 1/3% year-to-date; a marked contrast to the composite index' 23% decline. In seeming unity, Ayala stocks' AC, ALI and BPI were also up 1.08%, 1.47%, and 1.63%, respectively.

An issue that has been silently outperforming the market is SLC. Today it gained a hefty 7.82% to P482.50: the issue's all time high in its recent stint in the market. After opening at P450 during its debut, the issue languished for a few days to as low as P345 before steadily rising to almost 40% to its present level. Fellow insurance company, MFC which was listed a few months prior to SLC also reached a new high today, closing at P660. That's more than 53% up from its year-low and 32% year-to-date.

URB, which we clearly stated was an issue to avoid by virtue of its bank run closed at its floor price of P72, or P48 down from Monday's close, when it was last traded. However, at this price the issue almost becomes a compelling buy. The last time URB shares hit P72 was back in January 1994. Given that the turnover for the day was at a very thin P50K, we may expect a short rally from the stock.

Are You Hot?!

Basically prices have gone down enough that most issues can be considered cheap relative to historical prices. However, while we are expecting at a mild recovery upon announcement of first quarter results, the rally might not be broad based. In fact we can observe this now with a few issues hitting all-time highs simultaneous to others hitting lows. However, we do caution against chasing prices of issues that are currently pleasing to investors' eyes. Come hold my hand and together let us find a few undervalued stocks that will make millionaires out of us moles.

A good summer pick would be LTDI, which controls more than 50% of the bottled water market. And it is sooooo hot! So make sure you bring a bottle of Wilkins' to Galera or Boracay with you.

Still Getting Technical

Basically the same tips as yesterday. Just add these two issues: BPC - buy at P5.3, and SGI - HOLD.

By the way, I'm currently going through materials about J. Boag, the brewing company acquired by SMC recently. I must say, I'm not impressed with their financials at all. Their revenues have been on a decline for years and cashflows are negative year after year. That just doesn't go well with my definition of adding shareholder value. However, I'm still requesting for the most recent F/S from the company. Hope they heed it though. The latest available on their site is 1998. Nonetheless, if SMC merely bought the company to allow it instant presence in Australia, then we could say the company's value is more strategic to SMC than directly financial. More on that soon.

APRIL 25

Quickies Bebe

For the adventurous investor who is willing to put his money in Philippine stocks. Here are a few hopefully quickie trading buys for you...

FDC - P1.26, FLI - P1.90, MEG - P0.95, MPC - P0.65, SFI - P0.87, TEL - P765

Hopefully, you can take that to the bank!

What can I say? I can't resist the site...

APRIL 21

A Season of Reflection and Repentance

Apart from the usual problems regarding hardware and Internet access, a few other details have come into play. As such, I must beg off from this site for a while. In the meanwhile, kindly trade insights with other list members as I shall unmoderate it. You can even give tips through the guestbook if you wish.

I would also like to greet my friend Jojo, who has been complaining that I haven't greeted her here. She celebrated her 26th birthday last April 8 with a couple of friends in a truly marvelous weekend. She's single by the way. You can also see her picture here. She's the one with the greenest aura. ;-)

As for my final tip in a while, follow your heart. That I guarantee will make you feel richer than any stock market tip can.

APRIL 12

San Miguel Corporation - New Developments

SMC announced that it will issue franchises of SMC Pubs. Apart from providing additional revenues to the company, it will also allow for the showcasing of SMC's products and it will keep SMC aware of the latest consumer habits. SMC disclosed that three of its products, draft beer as well as Viva and Wilkins bottled water are available on-line. The company is currently studying an e-commerce strategy with which it aims to capture the next generation of consumers. With over 500 dealers available at its disposal, SMC aims to become a powerhouse in logistics such that companies that would want nationwide presence must deal with SMC. In this regard, SMC envisions an agro-industrial ecological estate which will result allow an integration of all production activities, thereby lowering distribution/transfer costs. The venue for the estate has not been finalized although SMC noted that it must be near the biggest market in Luzon and that it must be beside the sea as SMC will also build its own port. This level of integration is yet unseen in the Philippines and with this SMC positions itself as the trade hub in the Asean.

Regarding SMC's acquisition of Sugarland via LTDI, the former indicated that the talks are in the final stages of determining valuation. Sugarland currently controls 60% of the P5bn powdered juice segment. SMC on the other hand denied any interest in First Dominion, Fosters', URC or RFM saying these companies are of no strategic relevance to SMC as of the moment. SMC confirmed that the strong volumes registered in the first two months of 2000 have carried over to March and the start of April, and in fact have accelerated.

Comment: There is a consistency by which SMC has been implementing its new strategies. From the plans laid out, it would seem that SMC is primarily looking at marketing and distribution as the drivers for ever greater volumes. SMC ads in 1999 and 2000 would in fact reflect its thrust to entice a younger generation, with the usage of the most current pop hits as well as espousing everyday after-work drinking with friends. SMC Lite, the company's newest addition to its product line is positioned towards the health-conscious yuppie market with its focus on less calories.

LTDI's own Barangay Ginebra campaign individually targets different sectors of society, not merely in terms of profession or societal class, but also in terms of very Filipino behavior and principles, such as sticking it out with your friends and remembering your roots. At the same time SMC does not alienate its old drinkers as it reunites its audiences with long-time SMC endorser FPJ. Complementing SMC's proliferation of ads is a potentially effective feedback mechanism in the SMC pubs. This should make SMC's marketing more responsive as new trends become apparent. It can likewise be a venue for test-marketing. Long-term accumulate. Short-term trading sell.

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What's really amusing though is the way the stockholders' meeting transpired. Man, there were all these old people asking the silliest questions and making the funniest comments. There was one who requested that the SMC basketball team be present in next year's meeting. Another objected having SGV as the external auditor on the grounds that new CPAs and other auditing firms be given chances. A handful of them demanded cash and stock dividends there and then. A dear old lady suggested that God didn't like beer and gin since it leads to intoxication and consequently to crimes. If only for this reason, go buy a few odd lots of SMC, have these shares named to you and attend next year's meeting. Hmmm...maybe the entertainment value should be imputed in the price as well.

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Anyway, if you have comments, please feel free to voice them out. Thanks!

APRIL 11

Market Review

The composite index finally corrected 39.21 points after rallying for four consecutive sessions. Profit taking was broad based with decliners swamping gainers at a ratio of over 4:1. This was generally expected since there was a noticeable lack of volume in the erswhile rally. Leading the drop in the index issues was SMCB (-P1 to P55), TEL (-P20 to P935), MERB (-P2.50 to P77.50), MBT (-P1 to P233) and EBC (-P1 to P59.50). The most actively traded issue was Music Corporation which shed P0.65 or 6.34% to P9.60. Value turnover for the issue breached P268mn with underlying volume of almost 3x the issue's 20 day average. MUSX earlier announced that it will infuse $5mn-$7mn to Music Telecom, which is a 96% owned subsidiary. Music Telecom is a designer and manufacturer of computer telephony boards. The funds will be used to expand production capacity and fund sales and marketing efforts worldwide. However, the sudden drop in MUSX share prices was mainly due to the sporadic selldown of tech stocks in the Nasdaq. Considering that the renewed interest in MUSX was due to persistent news that its subsidiary Music.com will be listed in the Nasdaq, investors took the Nasdaq downturn as an opportunity to sell local 'tech' stocks. For validation, note that the biggest losers in today's session were V (-15.31% to P1.96), WEB (-12.90% to P0.27), IMP (-12.50% to P0.0525) and IS (-8.82% to P0.155). These stocks have all figured in the news lately with their press releases regarding their respective ventures into IT and/or the Internet business. Ayala Corp's iAyala has teamed up with telecoms and content providers to form a group of WAP users. The association will be called PhilWAP and the objective would be to popularise WAP in the Philippines. AC closed down P0.20 to P9.3. Cosmos announced that the company's market share improved to 21% for 1999 from 17% in 1998 following brand-building activities. For the quarter of 2000, CBC estimates volume growth at around 24%, given a backdrop of flat industry growth. This figure exceeds the 12% annual growth expected by CBC. As for the companies capital expenditure plans, CBC is setting aside P1.1bn from internally generated funds. A substantial amount of this will go to rehabilitation of the company's plants. CBC likewise declared P500mn worth of cash dividends. CBC's share price was up 1.72% today.

Market Outlook

We remain of the opinion that the market will consolidate. Volatility will continue to be caused by low investor participation, thereby requiring minimal volume to drive prices. The clamor for President Estrada to resign has settled down for the meanwhile, although other political issues like the Mindanao crisis may turn off foreign investors. Nonetheless, the effect will not be drastic since foreign funds have largely been drained from the market already. The best strategy seems to be accumulation of selected stocks during price dips. For 2000, companies that have shown promise in terms of volume growth so far are SMC (trading sell for the short term) , LTDI, ICT and MER.

APRIL 3

Market Review

What began as a moderate rally by the index was generally thwarted by broad based bearishness in today's session. This resulted in a sideways movement by the composite index, as it gained 6.6 points despite the number of declining issues being double gaining ones 69:34. But the actual highlight of today's trading is the marked lack of interest from investors. Value turnover failed to reach P1bn with index issues accounting for just under P470mn of total trades. The Nasdaq, which is a tech-heavy index in the US dropped 8% last week due mainly to a comment by a Goldman Sach's analyst that Internet stocks are overvalued. The precipitous rise in the values of Internet stocks here are generally hinged on US valuations. As such, the drop in the Nasdaq perhaps fueled the drop in the local wannabes. Web, the most popular of the lot dropped P0.10 to P0.38 and was the most actively traded stock. IS lost 7.14% to P0.195. V which stakes its claim as an IT firm by buying into existing IT companies lost 6.78% to P2.2. AJO, which attracted renewed interest after changing it's name to AJO.NET was pared by 3.03% to P6.4. PET which announced that it was in talks with a foreign Internet firm failed to capture punters' imagination in lieu to a 9.72% drop to P1.3. Even recent high-flyer MUSX which was buoyed by persistent theories of music.com's Nasdaq listing, continued to correct, shedding 2.38% to P10.25. SGI which announced that it has folded in Destiny Cable to the company dipped 3.51% to P2.2. ION, which has a strong presence in the electronics outsourcing market fell 2.33% to its 8-month low of P10.5. Fortunately for the market, several big caps attracted attention to see the market through positive territory. Foremost was MBT which gained 3.15% to P229 on the back of a P52mn net buying position of foreign investors on the issue. MBT's price has generally been on an uptrek ever since hitting its year low of P199 at the start of March. Traders saw it fit to buy PNB after the government announced that Lucio Tan will most likely sign the MOA to sell his stake in PNB. The issue rose 8.82%, but with weak volumes. BPC which has been one of the most resilient stocks for the year shored up its price by 2.9% to P7.10. It's share price has been struggling the past weeks though. SMCB rallied another P0.50 to P49 as it has done so for the third consecutive session. SMC announced double digit growth in volumes of beer for the first two months of 2000. In the meanwhile, MFC which is seemingly insulated from all the issues hounding the local market gained P20 to reset its all time high to P595. MFC hit a low of P425 late February and has steadily risen since then. SLC which free-fell after a strong debut last week has likewise been recovering sharply. Today it gained 8.64% to P440. Among the newsmakers today are UW and LTDI. The SEC announced that it has extended the debt repayment suspension of UW by another 60 days. The rehabilitation plan is being subjected to comments by creditors and is central to the entry of Casino into UW. UW was unchanged at P0.50 in sparse trade. LTDI which earlier announced that its net income soared by almost 2.5x for 2mo2000 against last year's earnings failed to arouse investor support as the issue fell 1.08% to P23. We continue to recommend a buy for LTDI.

Market Outlook

It has been established before that apart from cheap valuation of the market, there are no compelling reasons to take a long position in local equities. The Nasdaq's steep correction is weighing down on the confidence in tech stocks in the US, and consequently in the region. This may effectively quell bullish speculation in local tech stocks. If the local bourse continues to take its cue from the US market, we should expect a drop. A US news report announced that arbitration talks regarding Microsoft's anti-trust case collapsed. MSF is a large component of both the Dow and the Nasdaq.

APRIL 1

Talk to me bebe!

Just to add yet another dose of interactivity, I created a message board for stock market issues. Check it out ok? I also posted an interesting article on valuation. Check it out on the articles page.

MARCH 30

!

That's basically my political stand.

Stock Market Deconstruction

Unless you've been holding ABS or BPC, I can't imagine "buy and hold" investors earning these days. Other blue chips haven't been performing all that well you see. I'm particularly disappointed how the market hasn't reacted to the recent announcements made by SMC and LTDI regarding the strong volume growth they've experienced for the first two months of the year. Man that reflects a resurgence in consumer demand, and that has basically what we've been waiting for. Then again I suppose it just shows that the Philippines as a whole is in the avoid list of foreign investors these days. That has validation. In the three months of trading this year, I believe I can still count the number of times that we've had 'net foreign buying' sessions. Funny because we've been speculating since the end of last year that foreigners must have emptied their portfolios of Pinoy issues already. Apparently not. They must have dug up some old old certificates and dumped them in the market. Si Erap kasi...

Sure presidents get their share of flak that are just politically motivated. But in Erap's case, he's just had too much opposition from credible sources. The thing is, he was credible before having been voted president by a clear majority. But now with his popularity at -13%, you'd think he'd start to notice that there's actually something wrong with himself. Take note that while he's made a couple of stupid mistakes as was expected of him (so no harm done), what's really more disturbing is how he's done wrong things intentionally. Think smuggled SUVs, Mark Jimenez, Dante Tan, Yasay, Sis. Christine Tan. It's really quite a circus huh? Imagine calling up Winnie Monsod's (my hip ex-teacher) show to react to the debate! What is that?! Now he's dismissing the silent protest, saying it doesn't apply to him since he's not a dictator. And don't forget that he fired his chief of staff (whom I read was a good and intelligent man) for making comments about Erap's alcohol-progressive-midnight-cabinet. What does this all say? Apart from favoring friends and relatives, it also implies that the guy is petty. Lahat pinapatulan. And by not choosing his battles, he actually misses the big picture. Back in college, I would have called that behavior asal syota. Hmmm...and because he is president, I guess that makes him syota ng bayan...hehehe.

Anyway, what about this weather huh?

Our market sometimes takes its cue from the US, as does the rest of Asia. Well the indices there have been performing wildly. One day you have the Nasdaq reaching the 5000 level, some other day it drops by almost 200 points. The Dow which has been lackluster comparatively since the start of the year has been bucking up. Well there have been a lot of explanations being given. Goldman Sachs analyst Abby Joseph Cohen commented negatively about the prospect of tech stocks for the year, and man she was quoted in every US financial newsletter that I read. Talk about credibility. Well that certainly drove down the Nasdaq the other day. On the other hand, expectations of improved earnings have buoyed the saner-valued Dow in recent weeks. And then there's the ongoing discussions among OPEC members which has injected a bit of uncertainty in the market. As of the latest word, OPEC members ex-Iran have reportedly agreed to raise oil production by 7%. While I believe this is less than what the US was lobbying for, the price of oil is nonetheless expected to drop to the $20-$25 per barrel range, which is significantly lower than the recent highs around $32. Thus what does this say about our market? Well, combine an erratic external stimulus, with the sparse volume of index-stocks trade brought about by a) boredom with our market; and b) a more 'speculative' orientation of investors these days and perhaps add in the foreign selling data, and you'd have a market with a downward bias characterized by much volatility. I guess that's it for now.

By the way, if you're interested in reading a descriptive if rather crude report on PhilWeb, you can find it on my stock market e-group messages archive. ;-) And as always, I'd love to hear your opinion on my views. Said another way, if I'm wrong I'd really love to find that out. Hindi naman ako pikon tulad ni Erap... !

MARCH 29

Market Review

The index dropped with a broad selldown of issues, as decliners outpaced gainers 76:32. Mostly the drop was due to dips in big caps such as AC (-1.09%), SMPH (-1.72%), MBT (-0.45%) and BPC (-2.78%). This effectively nipped the market's two-day rally. However, market action wasn't really centered on these big caps, but on a few select issues with recent developments. Pacing all issues was Music Corporation (MUSX) which gained another 12.20% to close at P11.50. In the last five sessions, MUSX has gained an aggregate of 53% mostly fueled by talks of MUSIC.COM's possible listing at the Nasdaq. Music.com has become the premiere music portal in the US as page hits continue to accelerate. Another correction hit Web with a 6.98% drop to P0.40 as skepticism regarding the company's plans perhaps got the better of the company. In stark contrast to MUSX, the Web chart has been bearish for the past six sessions. Omico gained 5.26% to P0.20 on news that OM is finalizing a deal with a US-based Internet company. The company disclosed that both OM and its potential partner are conducting due diligence audits at present. Globe rose 4.44% to P11.75 after the company announced it signed a $42 million agreement with Swedish telecoms group Ericsson or the expansion of its cell phone network. This is the third major agreement Globe has entered with Ericsson, bringing Globe's total investments with the supplier since 1998 to more than $122 million. UW pleaded with the SEC to approve its rehabilitation plan as the latter in order for the buy-in by Casino into the company will push through. Casino will take an 89.2% stake in UW for P3.57bn. UW closed unchanged at P0.50.

Market Outlook

Nothing much has changed for the market and so we expect it to remain listless. Possible factors to watch out for will be the results of the talks among the OPEC members. Prices of oil overseas have dropped with the speculation that OPEC members will hike production. Look into the scheduled trasport strike tomorrow. Any notable violence could send shivers to the market. The recent announcement of the SWS that President Estrada's popularity had gone from +40% to -13% could also give a negative mindset to investors.

MARCH 24

Market Review

The market opened strong, spearheaded by AC which peaked at an intraday level of P9.4 (+P.03) and ALI which reached P7.5 (+P.05). There was also strong buying for LTDI as the company posted record revenues growth of 59% on the back of a 51% growth in liquor volumes for February. For the month, LTDI's net income soared 245% to P139mn. LTDI gained 3.26% to P23.75. The sentiment for LTDI as well as news that SMC will acquire a stake in Dole (details below) pushed SMCB shares up at opening to P48 (+P0.50). However, the positive sentiment was betrayed when foreign investors dumped MERB shares and were thus net sellers to the issue to tune the of P210mn. With that, MERB lost P3 to P68 - it's lowest close since September 1998. That weighed heavily on the market and sellers thus became broad based with decliners swamping gainers 61:39. In the end, the composite index was only able to eke out a 1.13 point gain, with AC shaving its gains to just P0.10. SMPH which earlier gained P0.20 to P5.90 likewise closed off its high at P5.8. Meanwhile, the listing of insurance company Sunflife of Canada (SLC) proved to be a success on its opening day closing up more than 35% above its offer price ofP348.035 to P470. Twenty six million shares were listed, or 6.5% of the total offering. Perhaps buoyed by the positive sentiment for SLC, MFC trekked up to its all time high of P585, before parting with some of its gains to close up 2.68% to P575. Other stocks that captured the market's imagination include PhilWeb.com which earlier reiterated a potential tie-up with Yahoo!. Web fluctuated in an 8% range before closing unchanged at P0.47. Musx jumped 12.99% to P8.7 on persistent rumors that Music.com will be listed at the Nasdaq exchange. This came at the heels of RFM's PSi Technologies Holdings own listing at the Nasdaq. RFM in contrast closed down 4.62% to P3.1. Vantage Equities which recently bought stakes in IT firms at what we feel are steep prices fell 8.77% to P2.60. The issue has fallen almost 31% in the past four sessions.

Market Outlook

The market is still in a period of consolidation. Issues nowadays are broadly cheap and so we theorize that some investors may have started picking up already. Nonetheless, the market can't seem to get off the ground despite local support as foreign funds continue their exodus from our market. We can expect volatilty as limited funds rotate among the large caps and the speculative picks.

Match Made in Heaven

SMC is reportedly ready to make a tender offer to the shareholders of Dole Food Co in a deal that could cost SMC anywhere from $800mn-$1bn. SMC is negotiating to acquire the shareholdings of Dole chair David Murdock who controls about 24% of the company. Ramon Ang was quoted by Asiaweek as saying, "We are looking at another company, a multinational in the US which is into canned food." Dole posted 1999 revenues of $5.1bn. It registered a net loss of $28.5mn in 4Q99 as against a loss of $108.3mn in 4Q98. Dole maintains a presence in 90 countries and employs 44,000 full-time workers. Thus it as a strong global marketing network, specially in Japan where it had penetrated the Seven-Eleven network. The story while unconfirmed seems plausible. If Dole indeed is the target company, we believe this will be very positively taken by SMC shareholders and investors. It basically has the necessary traits that SMC has been looking for: a food and beverage firm with a strong global presence.

MARCH 23

Catching up

I went to the briefing of PhilWeb.com (aka SSO) yesterday. I believe the investors' briefing lasted almost three hours. I'm actually glad I attended since I finally got a glimpse of the most aggressive Internet play wannabe in the market. Jumping ahead, I bought a few shares today at P0.47. Must have been convinced huh? Well I suppose you can say that. If you were able to read my past write-ups you would know I'm not very keen on speculative stocks. But here's one that I'll take a chance with. I'm writing a report on it and I'll probably release it by tomorrow or early next week. In the meanwhile, if you haven't been reading the papers, here's generally what the company is about.

It's an ISP. It will provide high speed internet access to subscribers equivalent to about 8x the speed you would get for the price you're paying.

It's a cybercafe chain. They're enticing current owners of cafes to tie-up with them such that the latter will be like franchisees. The company will provide hardware and Internet access support.

It's a business solutions provider and software developer. Basically they'll hire a lot of IT people and provide software and other business solutions to various businesses.

It's a content provider. They'll be coming up with their own web portals that will guide you through their various content and e-commerce sites.

It's a venture capitalist. They claim that more and more individuals are approaching them for financial support.

Well I didn't really bring my notes home so if I missed something, you'll just have to forgive me. Interestingly though, they mentioned that a lot of stock market analysts have already applied with them. I guess this means I should end this quick issue and start updating my resume. ;-)

Lastly, I would like to announce that Singles for Christ - Makati Chapter will be holding a Christian Life Program (CLP) really soon (forgot the details eh). Check out the site for more details.

Disclaimer

Please pardon the recent non-update. I'm having quite a few dial-up problems, as against psychological problems as some of you might suspect. ;-) Thanks.

MARCH 17

Market Review

The index gained 16.31 points given strong performances by Lopez companies' BPC (+P0.20) and ABS (+P3.50). Property heavyweights ALI (+P0.10) and SMPH (+P0.30) likewise gave the index a boost. The renewed optimism was generally attributed to the record setting 499 point gain by the Dow last night. In fact most Asian markets registered gains for this reason. Note however that there wasn't much supporting the gains as value turnover just breezed to P1.85bn where most of the trades were concentrated on thirdliners. Once again, the 'New Economy Wannabes' were bought up by various press releases. Vantage Equities gained 9.62% to P2.85, PhilWeb was steady at P0.43, AJO.net sparked 24.53%, and GEI inched up 1.67% to P1.220. In direct contrast, APX which denied that it was in talks with Siemens AG freefell 22.73% to P0.17. Dragged down with the news was IMP which lost 10.71%. It was earlier reported that Siemens would infuse $20mn into Apex to set up an e-businhess centre in the Philippines. RFM, which earlier announced the debut of its subsidiary PSI Technologies gained 12.90% to P3.50, even as it hit a high of P4.3.

Market Outlook

The market will remain in its consolidation phase. As it has been, blue chips will offer temporary bounces but will generally remain lackluster. The action will continue with the 'Internet' stocks given the continued barrage of press releases ranging from foreign tie-ups to mere change in company nature. For investment, as against speculative purposes look into blue chips with Internet or high-technology potential. As examples, you have ABS-CBN and ION. (In the spirit of full disclosure, I would like to add that I have exposure to ION)

MARCH 13

Market Review

The lingering weakness in the economy, the lack of political certainty and the various controversies hounding the stock exchange translated to another losing day for the market. The composite index was down 18.66 points, relatively benign against the 40+ point drops of late following the P45 drop of TEL. This is turn came after the company’s ADR dropped to $21 or roughly P860 last Friday after the Dow dropped 81.9 points. Notably though, even with the lack of investor interest in traditional blue chips and second liners, value turnover swelled to over P3bn - a rarity in recent months. It would seem as if a growing majority of the investors are now embracing ‘concept stocks’, or stocks with exciting prospects, but with hardly any track record, akin to what is happening all over the world. As such, most of the heavily traded issues were in some way Internet or IT related. You have PhilWeb, Vantage Equities, Imperial, Wellex, Island Mining and Music Corporation. Meanwhile, shares of PhilWeb.Com dropped 6.12% to P0.46 after investors sold on news that the company will be having a joint venture with AIG and Softbank, with the two investing $2.5mn each. The investment will be used to form an e-venture capital company which will invest in Internet and IT companies in the country. RFM announced that it expected its 1999 recurring net income to drop to P153mn from P357mn in 1998 due to higher provisioning for income tax payments. Based on unaudited figures, RFM said it recorded total sales of P18.3 bn in 1999, up four percent from the prior year's 17.6 billion. RFM said that 1999 was a transition year as it started to rationalize its non-core business so as to be able to concentrate on its food and beverage business. So far, this has yielded positive results as CBC recorded a 15% increase in sales for 1999 to P4.08bn on the back of brand building activities, while Swift Foods reversed its P10.23mn loss in 1998 to a P250mn income in 1999 with the integration and streamlining of its sales and distribution operations. RFM shed 1.56% to P3.15, CBC gained 0.81% to P2.5, while SFI was untraded from its last P1 transaction. Megaworld Corporation has disclosed its plans to become the premiere real estate solutions provider in the Philippines. MEG vows to make infrastructure costs in its CyberPark more affordable and to acquire a stake in the locator-firms. The latter disclosure is definitely positive as the company will be acting like a quasi-venture capitalist, and would therefore be helpful to technology upstarts. MEG likewise announced plans for a join-venture technology fund as it partners with well-known venture capital groups and technology investment companies. MEG gained 8% to P1.08 on the news.

Market Outlook

The pullback of ‘Internet’ stocks today is probably mere profit taking, as against a realignment of investment portfolios. In the short run, we expect investors to be oblivious to blue chips and would instead opt for high-risk/high-return stocks. As such, we see the index drifting to lower ground and might test the 1580 and 1450 support levels in the coming days. Relevant factors to watch out for would be the PSE controversies, the PLDT-ADR’s performance and perhaps the continued oil price hikes which in turn might lead to loud protests from consumers.

MARCH 12

Strictly Personal

It's a shame, but I don't seem to have an opinion on the market these past days, but let it not be said that I didn't try to write anything. I do remember seeing this full page employment ad by PhilWeb.com at the Bulletin Classifieds this morning. Well what do you know? Seems they have the funds to expand after all. I was actually thinking about applying. Maybe I will.

Anyway, there being no business sense in what I have to say to day, why don't I just talk about the fabulous concert that I watched yesterday. Julia Fordham rules. It's the second time I watched it, having seen her June concert last year. Despite the lack of any marriage proposals last night, it was still a treat. I wasn't able to brush up on my Forham songs, but I still managed to sing along the whole night. And I saw so many friends from different batches. Thus my advice to you, is to watch her repeat concert at the Shang this coming Monday, or maybe you can book a flight to Cebu where she'll be having another one.

In any case, if you've been living in the moon all these years and are not familiar with this babe of a singer, try out this link.

MARCH 7

Announcements

First I'd like to catch up on my greetings. Belated happy birthday to my friends Donna and Miel, who celebrated their birthdays last Feb. 4 and 19, respectively. I have a guestbook for Philippine Job Opportunities now. I added a new link to my Fight Against Pollution site. Perhaps you might also want to report a couple of smoke belchers that you've encountered. If you're a present or ex-UP person and a struggling webmaster, check out the UP Web Ring. Finally, you might be interested to read a few of my gripes against the MRT.

Market Review

The market has generally been dropping, due in part to the crisis in confidence brought about by the BW price fixing/insider trading controversy. However, during the past sessions the market has been greatly influenced by the movement of the Dow. The Dow reached its all time high early in January, before dropping 15% as of late as investors have been second guessing the Greenspan-led Fed Board. Alan Greenspan has reiterated his stance many times that he wants to prevent the US economy from overheating. As such, investors have been in a speculative frenzy as to how much the Fed will be raising rates to douse the strong economy. Releasing another statement to the effect, the Dow plunged 196.70 points with interest-sensitive stocks leading the decline. Thus the decline spilled over to our stock market, as the composite index dropped 51.58 points led by issues such as PLDT, SMCB, MBT and ALI. As has been customary during market corrections, a bulk of the funds were shifted to hot stocks like PhilWeb which cornered P553mn out of today’s P2.13bn, gaining 11.43% to P0.39, while the company’s ‘B’ shares gained a hefty 18.9% to P0.44. BW, which is the remaining holdover from the set of gaming issues that captured the market’s imagination last year accounted for over P243mn in trade vallue. Apart from that, investors were mostly looking at potential internet plays like Music Corp. which owns the highly popular site Music.com, as well as Vantage Equities and Island Mining. To date, the latter two seem to be fueled by pure market talk alone. Meanwhile, the stock market took another crucial blow in confidence with the resignation of PSE’s Compliance and Surveilance Group (CSG) head and VP Atty. Ruben Almadro and 16 of his staffers. He said that, "Particularly I am resigning because... of what appears to be a systematic and last-minute exoneration by the business conduct and ethics committee (BCEC) of some of the brokers implicated in my report during sham deliberations last week." As that developed, SEC chair Perfecto Yasay pondered on suspending trading in the Stock Market, citing that the Exchange would be "incapable of policing and disciplining its members and ensuring a fair and orderly market."

Market Outlook

We believe that if trading in the stock market is suspended, investors will have a tendency to liquidate positions once it is resumed. Expect the market to test the index support of 1630, as foreigners would instinctively dump RP stocks in light of the PSE’s seeming incapacity to police its own members, among other irregularities. Futhermore we believe this bit of news will overshadow President Estrada’s signing of the Retail Trade Act into law earlier today. It was one of the measures that foreign investors have been awaiting alongside legislation relating to Power, Banking and Securities which are all pending in Congress.

MARCH 5

IONICS

I made a write-up for Ionics Ciruits (ION). It's a bit too long to be posted on the site though. You can read it in the stockmarket egroups message archive. If you don't agree with my analysis, please feel free to argue against it. Thanks!