Positive Outlook by Gus Cosio

from Gus Cosio:


The market came back from intra-day lows to close up 15.71 points. It did not surprise me that as the market opened, most institutional investors were buyers albeit at lower levels. Even as foreign sellers were aplenty, local funds were more than willing to take on whatever stocks were on the block. At the end of the day, the market's position saw net foreign selling of Php 1.74 billion. Adding that to the Php 1.24 billion net foreign selling yesterday and the Php 1.2 billion net foreign selling the previous whole week, we are seeing a case where domestic investors are buying stocks cheap.

I like situations such as this because it shows that the breadth of the local market is growing. Hopefully, trading liquidity will be further developed as the PSE sees wider participation from domestic investors, be they individuals or institutions.

I greatly appreciate that local investors are becoming more forthcoming in taking market risks. This is textbook situation when relatively better returns can be gained from the equity market given the low levels of interest rates. Some stocks are still showing very good dividend yields. TEL should be at the top of that list, and MER should not be far behind. If we scour the list of large cap stocks, there will be a few that would be worthwhile buying for dividend yield. Nonetheless, even if we see another decline in prices before Thursday, I do not think it would be enough to reverse the present trend. I think the GDP number coming out on Thursday can assure us that the way to find returns this year will still be the equities market.

The recent top up for MWIDE certainly showed the resilience of this stock. I noticed that when MWIDE hit the top up price of 20, it strongly bounced back to close at 20.90. I am also quite impressed at TEL's resilience above 3150, as well as SM's good support at 1150. That shows the formidable following of these stocks. What was stellar today was URC which gained 4.64%. What it tells me is that the consumer story in the Philippines is not yet over. The bounce of DNL and JFC somewhat supports this view.

Anyway, I will hold on to my positive outlook on the market in spite of the recent downturn. To some people, bloody situations may seem grim; but if one puts it into perspective, it remains to be opportunity.