I don’t know if this story will make it to newspaper dailies tomorrow. What I do know is someone is very bullish on the Philippines.
JP Morgan is a global financial services giant, Wiki says one of the oldest in the world. In May, it was third in the Philippine Stock Exchange’s broker ranking.
Last month, it held its first investor conference in the Philippines since the 1997 Asian financial crisis. Now, it’s saying the key Philippine Stock Market index (PSEi) may reach 4,400 by mid-2008. Reminds me of the “blue skies” foreseen by Association of Securities Analysts of the Philippines (ASAP) president Francisco Liboro. He said in this article that once the market hits 3,700, the sky’s the limit. That means the market will be in uncharted territory.
If you agree with JP Morgan, wait before the market dips a little before adding to your equity fund holdings. Stock analysts believe the market is likely to undergo some correction in the next few days. Buy low, so you can maximize your returns. Then hold on tight. It might not be too late to ride the bull run after all.
It’s increasingly hard to find pessimists these days. If you don’t think the market and the economy will grow well this coming year, do let me know and tell me why. I’m interested in finding “contrarians.” 
So What Chocnut snippet:
What is the PSEi?
It’s the Philippine stock market’s key index, composed of a basket of 29 companies. It used to be called the Phisix. It’s a widely accepted barometer of stock price movements. The composition of the PSEi was modified last year to make sure stocks included in the index meet rigid criteria.
Do not confuse the PSEi with the PSE itself. The PSE is a private organization that ensures an efficient market for the buying and selling of shares, “efficient” being a relative term of course, in case you are going to compare the PSE with the Dow Jones or the NASDAQ.
Other business articles for those who want to be in the know:
Gov’t proposes P1.227T budget for 2008
Government is the country’s biggest “economic entity.” Its budget is a major factor in how the economy moves. I used to pore over national government budget documents at the DBM. Lots of stories there.
(UPDATE) Shares close higher on bargain hunting
Mining boom amid buoyant metals prices
This article gives a very good situationer on the mining industry.
BSP siphons off P200B in excess liquidity
Can you imagine that kind of money “sloshing” all over our financial system? Scary.
Money changer, 4 others nabbed for duping balikbayan
Practical note if you intend to travel to the Philippines with dollars in your pockets, or you know someone who will. Small money changers may offer better rates to lure you. Be sure you are not alone, even if you feel you can trust your friendly neighborhood changer and be sure they count the money well in front of you. Uhh…You know what? Go for more secure establishments instead.
June 19th, 2007 at 3:07 pm
hi angie, sorry for the inconvenience. Our search features have never been our strongest suit (sigh). To go to the article, just copy and paste this link:
http://business.inquirer.net/money/topstories/view_article.php?article_id=70880
Or, you may simply click on “this story” in the first paragraph of this blog post.
June 19th, 2007 at 2:54 am
Hi salve–
I cant understand why I couldnt locate the article “JP Morgan sees key index rising to 4,400 by mid-2008″. One Yahoo egroup member provided me the link and I was directed to that article. But when I typed in that title in Inquirer’s search box, it yielded 2 results, but I cudn’t get to that article by neither of the 2 links. Thanks!
June 16th, 2007 at 7:21 am
In my previous life as an FX trader, we basically use technical analysis as basis for buy/sell decisions because of the lack of market news to sustain an 18 to 20 hour trading day. The idea behind this approach is that the “price” of a security is the sum total of all factors that affects its present value and by studying the patterns of movements that led to where it is at the moment, can predict it’s most probable future direction.
Saw a newspaper headline yesterday (I think the inquirer) that says “stock prices at 80-year high”, the impression it created on most people who called me yesterday was the stock market is already at record high and is prone for a correction, the common question is whether its time to cash in on profits and maybe shift to “safer” fixed income instruments.
How high is high and how low is low? This is a question that even the most skilled technician may have difficulty in answering because as the price moves into uncharted territories (a chart break-out in tech parlance) their predictions of future movement will be as good as anybody else as the basis for their past decisions would have been effectively been voided as a result.
Phisix today at a new 80-year high of 3,670 level and onwards to 4,400?
My advice at this point to go back to basics and ascertain if the “reasons” for the initial take off three years ago is still valid and intact, and whether these reasons would continue to build upon itself and create a virtuous cycle? Are there any new factors that entered the equation? But most important is their personal comfort level in holding on to these “high-priced” securities because at the end of the day, our own personal objective and well-being should be the primary driver for any investment decisions.
Thanks
June 15th, 2007 at 10:03 pm
pinoy investor
i agree higher gain = higher risk. of course you must be a gifted stock picker to anticipate a price increase of 3% (allow 2% cost for buy/sell transactions) with net 1% gain on daily basis. in a bullish market the odds of most stock price increase exceeding 3% everyday is in your favor. but who ever heard of a trader who never lose a single trade for 1 year and made a 1300% gain.its like going to a casino with P100 and applying double or nothing bet. after winning the first game, next bet is P200 then P400 on the third and so on. if you get 20 straight wins how much do you think your P100 has accumulated. its over P104M. so you risk P100 to gain P104M but the chances of achieving is slim. but it could be fun.
June 15th, 2007 at 10:13 am
don2x:
The potential profit in daily trading is higher but so is the potential loss. Higher return, higher risk. If you want to quantify that risk, tabulate the profit/loss from daily closing prices for one year. Compute the annualized mean and standard deviation. The risk premium is mean plus std. dev. minus fixed income rate.
Assuming the risk premium is 10% and your fixed income rate is 20%, your target price should be at least 30% up. If the most optimistic forecast is 23% up, then the odds are against you. You’re taking too much risk given the potential return. Of course gamblers like to beat the odds and sometimes they do.
June 14th, 2007 at 10:46 am
psei potential rise of 20% may be small but if you trade often and get lucky the compounding daily net gain can be tremendous. say starting with P250000 dividing it into 5 buy transactions at P50000 each and sell the next day with only 1% net profit each. you rollover the proceeds and buy/sell again daily for a year. assuming you never lose a single trade, in 1 year your capital will increase over 1300% or over P3.4M due to compounding. however i never heard anyone who have accomplished this.
June 14th, 2007 at 9:54 am
haribon:
We don’t do 5-6. In fact we’re getting out of microlending because our collection rate is too low. We’re not getting paid. Our loans usually end up as interest free, pay when able loans. My wife is still that it because she wants to help people. I always remind her we’re not running a charity, we’re running a business.
June 13th, 2007 at 11:58 pm
20% per annum?? hmmmm… for a microfinancing(lending) bussiness like 5-6, you can get 20% in two months which means 120% at least in a year!! but i let that away to those no-conscience sharks!!
still, i play their game and gain 3.5% for my money in a month that equates to 42% per annum.
no way PSEi can beat that!!
but were talking micro here, meaning few hundred thousand bucks are involve. if you have millions, it will be really hard to spread into so many lendee as your collection burden gets heavy on you.
i shall gain my million/s soon and i have to diversify. longterm goal is to continue gaining much from my microlending and spend more bucks on learning to ride the highly volatile market (stocks, etc) and real estate maybe.
time is of the essence here, we might miss the window of opportunity which is open now. the next bull-run might be long time to come and if we don’t ride the present one, we might not learn how to tame it to work for our gains. there’s nothing to loose, just spare some money now on education. it pays in the long run.
happy investing to all !!
June 13th, 2007 at 6:25 pm
[...] Money Smarts: Key index seen at 4,400 [...]
June 13th, 2007 at 4:48 pm
hachiko:
Microlending is very risky and collection is a headache. Our appliances at home are payments in kind by debtors. That’s how we reduce risk by mixing household and business assets.
Our cars are from car trading. We use them while unsold. Our food, toiletry and consumables are from direct selling. Those are inventories stocked in our house. Our house is part of our real estate portfolio. I would sell it if I can buy another house in our neighborhood at big discount. I bought our house at 35% discount. Our business motto is if you can’t sell them, use them. (thank god my wife is no longer in the RTW business or else we’ll all be wearing factory surplus)
btw, 20% is not micro or direct lending. Microlending is 36-60%
June 13th, 2007 at 3:30 pm
salve:
I don’t think there is one set of information that will expand everybody’s investment options. It’s really what you do with the information. I’m not a good stock picker so stock info is not useful to me. But I know someone who is very good at stock picking. He can outperform even the best mutual fund using public info available to everybody.
I’m better at deal making than stock picking. I need a different set of info like where to find people with lots of real estate but short in cash.
A friend of mine is very good at startups and using OPM. He needs info on business opportunities and where to find people who will invest in his business.
It’s just learning and doing what you do best. The more you do it, the better you become. You can’t outperform the market by investing in off the shelf products. It’s your value added that makes the difference. I hope I answered your question.
June 13th, 2007 at 2:41 pm
Really nice lending options pinoyinvestor has access to! Must be direct loans to companies or individuals to make 20% per annum. I even recall it’s 36% per annum for loans to relatives in the province who run ricemills, but I only commit to them on limited capital and terms, pinoyinv’s more comfty than me on stuff like this
little wonder you like to go into banking, you know your “margins” and “spreads” quite well.
In my own comfy zone of institutional investments - stocks, bonds, funds - 25% increase in PSEi from 3,500 to 4,400 is optimistic and already something to look forward to. I’ll not take a bullish / contrarian stance by just projecting 16% yield one year forward, or 4,100. But stocks are a nice vote of confidence in the fortunes of emerging economies, whether RP, ASEAN, China, India, etc. We live in interesting times so let’s just hope for the best!
June 13th, 2007 at 2:30 pm
hi edzmaya, thank you for the complement
lemme know when your blog is up. The more the merrier!
June 13th, 2007 at 2:28 pm
hi pinoy investor, watching how your mind works is a revelation of sorts :-). How to get at those investment options should be my next question. I was commenting on a CEO blog run by Reuters top honcho Tom Glocer that one of the weaknesses of small, inefficient economies like the Philippines is the difficulty by small guys to have access to information that in other markets are available to everyone. These information I am talking about are the kind that would allow investment overperformance. Journalists are supposed to help in this situation by publishing information that would empower everyone in their personal investing, their own businesses, even in their political decisions.
So what’s the point of my comment on your comment? I guess this is my technical way of whining, meaning sometimes I feel that the job is just to hard, haha. So help us out..how can we expand our investment options the way you do?
June 13th, 2007 at 12:03 pm
hi salve!
i have been reading your blog during office breaks and i find it fun and informative at the same time.
the other day, i started exploring on the possibility of having a blog too. just so that i might be able to share whatever it is i might stumble upon in my quest for financial freedom.
cheers!
June 13th, 2007 at 11:21 am
salve:
Here’s a contrarian view. In technical analysis, when prices are at record high, that’s a signal to sell. When you’re on top, there’s nowhere to go but… up?
Granting the bullish prediction will come true - 4,400 by mid 2008. That’s 23% up from today’s index. I earn 20% on fixed income. A 3% spread will not entice me to gamble in the stock market. But as I said before, it depends on your available investment options.