Worst PSE stock performance since 2008 -- what to do now?

Make the right stock investment decisions. Be guided by the country's top brokers.

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Dear Welmar Chavez,

Philippine stocks yesterday suffered the worst 1-day loss since the Lehman Brothers' collapse in 2008, with the index closing at 6,114.08. What should we do now?

No one can really predict the direction of the market but for your reference and guidance, we gathered below some thoughts and opinions from top brokerage firms in the Philippines to help you navigate the stock market. Take note that the decision to listen to and be guided by specific brokers should depend on your own outlook of the market and your own investment objective.

You probably know by now that ups and downs are normal occurences in the stock market. The challenge is to always stay on top despite market reversals and upheavals. A smart investor like you knows how to do that based on all information you get from credible sources, and that's what PinoyInvestor is for!

Here are our partner brokers' Technical Analysis of the PSEi. Take note that technicals usually offer a short-term view of the market.

ABCapital Securities (June 13, 2013): "Despite the steep declines, the PSEi still tracks the Nikkei 225 as the most expensive index in the regional markets. At what level will the PSEi be at par to its peers? By getting the mean of the regional forward P/Es which is at 14.13x, this translates to 5,382.19 – rounded up to 5,400

which is also the target based on the head and shoulders pattern. The bearish pattern is expected to ensue for the medium-term (within three to six months). At 5,922.22, the PSEi will officially enter the bear market."

2TradeAsia (June 14, 2013): "Having cracked below the 6,300 psychological support barrier, participants might remain at bay to check if supply pressure has already weakened. We see this as an 'aberration', as fundamentals towards growth remain sound. Immediate support is 6,000-6,100, resistance 6,200."

Here are Fundamental Analysis on the PSEi of other brokers in the Philippines. Fundamental valuation typically use a long-term view, that is, at least 3 to 5 years' time period.

ATR KimEng Asset Management (June 13, 2013): "We think fundamentals remain strong and for long-term investors it’s is a good opportunity to improve their position so we see this as a buying opportunity. It’s gonna be difficult if you try to find the bottom. Investors now are best served having a long-term view of the markets. You have a backdrop of low interest rates, rising economy, strong earnings growth. The long-term picture is very positive. We don’t recommend trying to get the bottom. We wouldn’t be surprised if the market starts stabilizing, or even show a rebound of sorts."

CitisecOnline (June 13, 2013): "Nothing has changed fundamentally. We know where investors are attributing the selloff: concerns that the Fed will scale back its bond buying. It’s externally driven in that respect so what we’re seeing today is an opportunity to buy. Before we end the bull cycle, we’ll see higher highs. It’s still difficult to say if we’ll return this year to record levels, but we think the bull cycle is still intact."

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Happy trading!


Best regards,

Your PinoyInvestor Team
http://www.pinoyinvestor.com/stockpicks/member