Forget the BRICs, Buy TIP! | BRICs, Philippines 2


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The PSE Index – April 30, 2012

The Philippine Stock Exchange Index, PSEi on Monday closed at 5,202.70, up by 33.65 points or 0.65% closing the month of April above the 5,200 level. Market breadth was positive with 87 gainers vs. 69 loses; while 47 stocks unchanged. On Thursday, 26 April, the PSEi reached another record level at 5,218.97 with an intraday high of 5,247.15. Year-to-date, the index has grown 19.4% or 847.01 points.

Looking at the chart below, I’m seeing the near term resistance at 5,240 and the major resistance at 5,300. While support line is pegged at 5,145 down to 5,100 points. As always, I’m still optimistic at our PSE index for May 2012 as more IPO’s to be launched, namely, East West Bank and Calata Corp.

2012Apr-PSEi Index

PSE Index – 30 April 2012

Forget China and India, Buy TIP: Turkey, Indonesia and Philippines

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Here’s a good reason why I’m more upbeat on Philippine stocks!

Ruchir Sharma, the head of Morgan Stanley’s Emerging Markets says rapid growth can’t be sustained and it’s time to look for the next decade’s big growers for big returns. For the last decade it’s all about “BRICs” or Brazil, Russia, India and China, but after a decade of rapid growth, the world’s most celebrated emerging markets are poised to slow down.

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In his interviews, Mr. Sharma, defines a “Breakout Nation” as:
a. a country that is able to beat expectations in terms of growth rate
b. a country that’s able to grow faster than other countries in the same income class per capita income

I like his positive comments on our country and said that “Philippines used to be the 2nd richest economy in Asia in the 1960’s. It had 3-4 decades of political chaos, and now it has a new leadership in place there” He has a very optimistic view and trust in the current Aquino administration with regard to the Philippine economy.

Here’s the 5-Year GDP (Gross Domestic Product) Forecast of the Breakout Nations

Philippines:6% GDP Growth 2012-16
Indonesia: 6.5% GDP Growth 2012-16
Poland: 4.0% GDP Growth 2012-16

Source: Morgan Stanley Investment Management

In terms of per capita income, Mr. Sharma stated that the poorer country, the higher growth rate should be, theoretically. If a poorer country grows about 3-4%, that is, a much significant development than for a rich country that grows 2-3%. Poorer nations need to grow fast and sustainable growth is key, he added.

Below is the IMF GDP Growth Forecasts

2012    2013    2017
Turkey             2.3%    3.2%       4.6%
Indonesia    6.1%     6.1%     7.0%
Philippines        4.2%    4.7%       5.0%

Source: Breakout nations by Ruchir Sharma

Paying for Performance

Turkey         9.7 current P/E
Indonesia    16.2 current P/E
Philippines    15.4 current P/E

Source: Thomson Reuters Starmine

Dow Jones Industrial  14.69 P/E ratio
S&P 500                    16.09 P/E ratio

Source: Wallstreet Journal

First of all, let’s define a P/E ratio in simpler terms.

The P/E or price-to-earnings ratio is is a financial ratio used to determine how much investors are willing to pay for a stock relative to the company’s earnings. It’s calculated as current price of a stock divided by company’s earnings per share (EPS). A higher P/E ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with a lower P/E ratio. Most of the time, the P/E is calculated using EPS from the last four quarters. This is also known as the trailing P/E. However, occasionally the EPS figure comes from estimated earnings expected over the next four quarters. This is known as the leading or projected P/E.

If you’re a foreigner and wants to invest in the Philippines, you can go to Ishares.com and add MSCI Philippines Investable Market Index Fund (EPHE) on your portfolio. Winking smile

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Sources:

P/E Ratio: Investopedia.com

“Forget China and India, Buy Breakout Nations” on Reuters.TV

http://www.youtube.com/watch?v=WJXaA2I-rPA

Breakout Nations: In Pursuit of the Next Economic Miracles – Ruchir Sharma

http://www.amazon.com/Breakout-Nations-Pursuit-Economic-Miracles/dp/0393080269

The New “BRICs”

http://finance.yahoo.com/blogs/daily-ticker/brics-123351582.html

The Next Big Trade on Bloomberg.com

http://bloom.bg/IkFger#ooid=9yYnFpNDp_2t1cwNA1ZiRDHDZx7v89Ih

Image courtesy of 123Rf.com


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