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Thursday, August 02, 2007

Current Stock Market Woes



The past few months have been nothing short but spectacular for the Philippine stock exchange that has reached new highs and made a lot of stockbrokers and stock traders millionaires. With one IPO released after another, one would think that the good times would never end. But then as fate would have it, the US sub-prime mortgage problem has hit home and practically wiped out gains of the composite index in the past two months. The US home loan concern is further aggravated when the lending firm American Home Mortgage Investment Cop. (AMH) shares plunged 90% of it’s value leaving anyone still left holding this hot potato a very big migraine. Is the Bull Run over? The recent drop in the PSE has turned investors to consider fundamentally strong stocks in favor of quick gain speculative stocks.

A lot of recent IPO’s like Aboitiz power and Vista land has been a really big disappointment for small investors like me as those stocks are now trading below their Initial offering price even before the US sub-prime problem had hit us. But for those waiting a chance to get into the action are now very much in the position to do so since these IPO’s are now very attractively priced and previous IPO’s like Alliance global are now also trading below initial offer price. The only bright spot in all of this is that the GMA IPO performed very well and bucked the downward trend, and despite the controversy regarding the claim made by Imee Marcos.

Although it is still too early to tell if the market has turned bearish. Most investors are now waiting in the sidelines to see what will happen in the coming days before going right back in when the storm has passes. What happens in America will always have an effect on our stock market. But I believe that our economic fundamentals are strong enough not to be dragged down and I a m looking forward in recouping our losses soon.

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