State of the Stock Market

Surprise, surprise.

It's either I wasn't any much interested in the local stock market anymore; or, I was just plain busy these days that I didn't notice that Megawide (Ticker MWIDE) listed just this Friday (Feb 18).

Or.... I just didn't have the funds.

Not that I lost a big opportunity anyways, as the title of the news article in PDI online says -

"Megawide lists stocks, closes at IPO price of P7.84/share "

It closed at the IPO price??

Even the fact that the owners of MEGAMall, i.e. the Sy family, buying a chunk of the shares did little to up its IPO performance.

If memory serves me right, the same thing happened with the listing of Anchor Land in 2007 I think. The IPO was lackluster even though the Sys bought a stake prior to its listing.

Oh well, as they say, history does repeat itself in the stock market.

Speaking of repeating itself, I remember during my class in RFP, Mr Efren Cruz did mention that stock markets are on its peak if there are many IPOs.

While I don't consider the recent IPOs as that many compared to 2006-7, it does mean that the conditions in the stock market have been ripe and, to quote an often used phrase of stock market analysts, "valuations are good". Or, in layman's terms, people are willing to part with higher amounts of money so the corporation gets more funds per share.

It also means that when the stock market is on its peak, it will be a prelude to a market correction. So, history is repeating itself. The key difference though is that the correction may not be as dragging as it was in 2008.

On hindsight, the correction set the stage for a banner year in the local stock market in 2009-10.
So will the second half of 2011 be like that? Hopefully...

To continue, since the conditions have worsened recently, Filinvest Development Corp deferred their planned secondary offering with no commitment date. San Miguel Corp. also deferred their plans, but said it would be sometime March.

Pertinent text from the news item -

Start quote

SMC president Ramon S. Ang earlier said the company wants to proceed with the sale of as many as 1 billion common shares valued at P200 to P250 per share within the first quarter.

At the high end of that price guidance, the follow-on offer will be worth P250 billion, proceeds of which will be used to accelerate SMC’s diversification away from its traditional businesses of food and drinks into infrastructure and mining.

Market watchers agreed with the sale postponement, saying the company can fetch better values once the market settles down.

End quote

Well. Even mighty SMC succumbed to the mightier stock market.

If I were you, I think it's best to take a vacation and just re-evaluate the stock market come second quarter.

My only hope is that the market doesn't sink lower; and, the BSP be clear whether or not they will raise interest rates, inflation will indeed go up.

I mean the taxi meter already started inching up. Others (food prices, toll, etc you name it) may soon follow suit.

Abangan.