There is no question that the Philippine Stock Exchange (PSE) has been a big pain in the neck recently with all its yo-yo-like action. One day, prices follow the movement in New York; the next day the PSE ignores the world trend. Individual issues that were rocket chips for a couple of weeks suddenly looked like they were going to sleep.

Technical analysis points to a possible double top and a drop in prices. Yet, when the support level looks ready to be breached, prices rebound. The pre-opening comments in the newspapers forecast gloom and doom, and then the market goes up. Positive comments are ignored and prices go south.

What is a humble stock-market investor to do? Simple. Look at the big picture.

Let’s talk about the world for a moment. Everyone lately is focused on the United States—the recession or economic slowdown, the death of the dollar, the credit crisis. The United States maybe the largest economy on the planet, but it is not THE world economy.

Between 2005 and 2010, based on the last five-year trend, global financial assets will increase from $180 trillion to $200 trillion, and most of that wealth will be created in Asia. Another thing: as the United States is not the West, China is not all there is to Asia. From the editors of Money Morning: “We’re in the midst of the greatest investing boom in almost 60 years.”

Oh, you say, “But this is the Philippines and you know how we are, behind, backward and Third-world.” Don’t count on it. Again from Money Morning: “All the hot talk of China, India and even Vietnam’s soaring economies have overshadowed a country that has been making gains for the past decade, the Philippines. The government slashed the budget deficit to less than 1 percent of the GDP from 4 percent in 2004, halved inflation to 3 percent, managed three consecutive years of 5-percent to 6-percent economic growth, and enabled the Philippine peso to strengthen 18 percent against the dollar. Long an agricultural-based economy, the Philippines has become an industrial and outsourcing powerhouse.”

Now this is a very interesting point. “Perhaps why the Philippines ’ surging economy hasn’t made much news is because few of the companies listed on the Philippine Stock Exchange have filed the [USA] SEC [Securities and Exchange Commission] requirements that give the green light to US investors.” Let me explain.

Say whatever you wish negative about the United States; investors in America are more prone to taking risks than anywhere else. Americans are wealth creators and they invest their money wherever they can make a profit. Buying shares of companies listed on the Philippine, Bombay, or Hanoi stock exchanges would not bother them as long as there was profit potential and if US law allowed them. You see, US SEC regulations do everything possible to keep American investors from buying shares on our stock market and many others like the PSE.

“Foreign companies that haven’t registered with the SEC are off-limits to individual investors. The registration process these overseas companies face is not a simple one, so the rule can also stop [Americans] from investing in legitimate companies, ventures that could one day grow into Asia’s version of Cisco Systems, Intel or Microsoft.”

“San Miguel Corp., a food, beverage and packaging company that accounts for 3.6 percent of the country’s GDP, is barred by Sarb-Ox. As is Manila Electric Co., which posted a 62-percent gain in second-quarter profits.” “Sarb-Ox” is The Sarbanes-Oxley Act of 2002, which came in the aftermath of the Enron accounting fraud.

The situation is so ridiculous that individual stockbrokers in the United States are telling clients who ask about investing in the Philippines that since they cannot invest here directly legally, they should buy the foreign companies that are making so much money here. These include Texas Instruments, Nokia, Ericsson, computer giant Dell, Intel, and call-center giant Convergys.

So what is the lesson to be learned as a local Filipino investor? Relax, or, as my teenage son, says, “Chill.”

All the turmoil in the United States is not, repeat, not, going to derail the economic advance that we have been experiencing in the Philippines. There is so much room for economic expansion here and so many ways that growth will occur.

Use your head with your stock-market investing. Identify those companies that you know are going to be making much more money in the near-term future. Look for trends, not just day-to-day activity. When a good company’s shares decline, treat it as a great buying opportunity, not as a reversal of trend. Unless the fundamental reason you bought the stock has changed or disappeared, grab the buying opportunity.

The rule of thumb for midsize companies: less than a 20 PER and continuing developments that show a positive future. You will make big profits. 

E-mail comments to mangun@email.com.

THIS week, there have been several venues for discussing the future of the Philippine economy, as the national income accounts reports for the third quarter are being released; as the exporters, representing one of the main planks of economic growth, are continuing their agitation for government intervention as they reel under the impact of an appreciating peso; and as the agriculture sector leads in the observance of National Biotechnology Week.

With close to half of the world’s economic output coming from knowledge and its management, managing intellectual-property (IP) assets is the most important task for any individual, corporation or country.

There is no question that the Philippine Stock Exchange (PSE) has been a big pain in the neck recently with all its yo-yo-like action. One day, prices follow the movement in New York; the next day the PSE ignores the world trend. Individual issues that were rocket chips for a couple of weeks suddenly looked like they were going to sleep.

Tax Law for Business: Within, beyond scope of Letter of Authority

Due to the number of assessments and tax-audit investigations being cancelled on account of the taxpayers’ availment of the tax-amnesty program, the Bureau of Internal Revenue (BIR) began issuing new letters of authority (LA) for the examination of taxpayers’ books of accounts and accounting records for the taxable years 2006 and 2007.

Swords into plowshares

Living during a turbulent period of political and religious decay, Isaiah of Jerusalem warned his countrymen that disaster awaited them if fidelity to God was not restored. 

Even amid a skyline jammed with massive construction projects, the Burj Dubai is a standout.

In September, it beat the 31-year-old record held by the CN Tower in Toronto to become the world’s tallest freestanding structure. When it’s completed in 2008, Dubai’s tower will be the tallest building in every category and home to one of Giorgio Armani’s first hotels.

For a culture that runs on credit, this has been a year in which millions of vehicles have been stranded on the side of the road.

Sparked by a mortgage crisis caused by the housing bust, lenders are sorting out the “haves” and “have-nots” as the industry retrenches. So now is the time to tune up your record so that you have ample access to credit for the holiday season.