How’s the Philippine Stock Market Doing?
August 2, 2010
The PSEi is now at the 3,400 level. There might be a shift from bonds to stocks as we have observed the year-to-date yields of peso bond funds decline significantly from July. This is where we base our blended multiplier limit or the boundary between bargain and premium stocks. With the lower bond yields, the latest blended multiplier limit is higher than usual at 38.6x. This means that our bargain stocks have increased from the usual dozen to 21. There is now a wider selection of stocks that can be acquired. Below is our 40-stock coverage.
The first bar in the table above separates the bargain from the premium stocks. The eight stocks between the first and the second bar are premium stocks that can be acquired by averaging equal number of shares of bargain stocks with them and still stay within the blended multiplier limit. An example of this is bargain stock FPH with a blended multiplier of 4.3x averaged with premium stock ABS with a blended multiplier of 72.4x. The average blended multiplier of the two is 38.3x. This is still below the blended multiplier of 38.6x. Stocks beyond the second bar are expensive.
Speaking of FPH, the stock has replaced VLL as the cheapest stock in our coverage. VLL has rallied to the PHP2 level. The stock still has a huge upside though before leveling with the market.
Pymwymi Fund Performance
The Pymwymi Fund is up 32.2% while the PSEi is up 15.0% from the start of the year to August 2, 2010. Two of the 15 stocks comprising the Pymwymi Fund have triple-digit growth. Eight have double-digit growth, four have single-digit growth, while one has a decrease in value from the start of the year. This shows the strength of a diversified portfolio of stocks rather than investing in a fewer number of stocks.
The Philippine Stock Market Research report is solely for information. It should not be constituted as an offer for solicitation for the purchase or sale of securities mentioned. The information herein has been obtained from sources believed to be reliable. Whilst every effort has been made to ensure accuracy, we do not guarantee the accuracy or completeness of the report. All opinions and estimates expressed herein constitute our judgment as of this date made on a reasonable basis and are subject to change without notice. No liability can be expected for any loss arising from the use of this report or its contents. As this is general information, it does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may obtain this report.