China-Philippines Partnership Blooms: Time to Invest in the Philippine Stock Market?


The Philippine Stock Exchange Index (PSEi) has been moving inside the downtrend channel since September 2016. Is the blooming relationship between the Philippines and China a signal to buy or sell stocks in the Philippine stock market? Here’s my take.

The Department of Tourism (DOT) is optimistic about the new relationship blossoming between Beijing and Manila. Wanda Teo had a meeting with Chinese investors from the travel industry about the possibility of operating here in the Philippines.

The number of Chinese tourists in the Philippines is increasing pretty fast. The need for new hotels and lodging is imperative.  Teo said that the number of Chinese visitors this year more than double the number of last year.

Beijing Tourism Group (BTG) said that the reason for the influx of Chinese tourists in the country is all for the efforts to continuously improve the relationship between China and the Philippines. Bai Fan, Vice President of BTG, said that tourism in the Philippines can benefit from the growing relationship between the two countries.

This, and the beautiful tourist attractions in the Philippines, can definitely help push Chinese investors to set up businesses in the Philippines.

Bai Fan added that the number of Chinese tourists can further increase if the process of getting visas, the scarcity of accommodation, and poor airport services can be addressed. BTG is also eyeing the Subic Bay Freeport Zone as the area best for their investments.

According to Stephen Chen, general manager of a big local travel company, the president’s state visit to China opened the doors for the tourism outbreak we are now anticipating.

The companies who joined Teo during the meeting were very eager to invest or expand their businesses in the Philippines.  Teo also made sure that all their concerns are well-documented and will be addressed.

Teo, together with Li Jinzao, the China National Tourism Administration chairman, also signed a memorandum of understanding (MOU) regarding a tourism partnership from 2017 to 2022. This MOU looks to enhance the tourism relationship between China and the Philippines.

The main highlight of the MOU is the investment in tourism infrastructure of China in the Philippines. There will also be an exchange of tourism experts between the two countries to aid in the development of resorts, ports, accommodations, and other travel industry related components.

The countries’ two major cities, Manila and Beijing, are also going to continuously talk about the latest travel industry trends and review statistics on both countries’ tourism performance. China and the Philippines will also maintain measures to ensure safety of existing and new tourist destinations, flights, and other services.

This MOU will also provide both countries access to promote each other’s tourism.

I’m sure you’d like to ask if this good news made an immediate and significant positive impact in the stock market as of October 21, 2016.

As of yesterday (October 21, 2016), the Philippine Stock Exchange Index (PSEi) or PCOMP moved backwards by 0.82%. It wasn’t a surprising thing especially for those who know that profit-taking usually happens on a Friday. I still have the exact same sentiment as I’ve posted on “PCOMP’s Back to the 7700 Level: Courtesy of Moody’s Upgrade on PH’s GDP Forecast?” 2 days ago. Please read that report.

PCOMP - Daily Chart - October 21, 2016

In one of my reports last year, I mentioned that the majority of foreign accounts comes from Chinese investors. That is why when I read on news that President Rodrigo Duterte was bidding goodbye to the US, I just shrugged my shoulders and moved on to my daily tasks. Surely, you lose something and gain something when you cut ties with someone. I  am just too busy to add up to the “pollution of opinion” on social media.

Anyway, do you see those last 3 green candlesticks on chart below? Foreign investors hoarded P1.7 billion worth of shares in the past 3 trading days.

PCOMP - Foreign Fund Flow - October 21, 2016

There’s an improvement on PSEi’s volume for the past 2 trading days.

PCOMP - Volume - October 21, 2016

So, is it a good time or a bad time to invest or trade in the stock market?

There is no such thing as a “standard season” where one can say “Yeah, it’s a good time to buy” or “Yeah, it’s about time to sell”. The goodness or badness of timing is subjective. It may be a good time for me to buy Stock XYZ based on what I see on my charts and data and time horizon but not for you. For example, it may be a bad time for me to invest now if the cash in my portfolio is my wedding fund and I’m getting married 9 days from now, but it’s the best time to invest for you because you have cash that you don’t need for the next 10 years. Do you get what I am saying?

So don’t ask, “Is it okay to buy or sell now?” Ask for data instead. If you’re one my clients in the Stock Signals, ask us to interpret the data. Now, don’t take our word for it. You need to quantify because, whether you like it or not, an analyst will still interpret things based on his or her own risk appetite and circumstances (like what I’ve explained above). You must (this is a command, not a request) exercise your God-given ability to make cognitive decisions based on your risk tolerance and situation.

In the Stock Signals, we don’t sell “decisions on your behalf”. We simplify the technical world of the stock market by writing our data-oriented insights in a level that a layperson would understand.

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Jaycee De Guzman

Jaycee De Guzman

I have helped thousands of Filipinos trade independently and invest profitably through the Equilyst Analytics, Inc. I have also helped hundreds of SMEs and Fortune 500 companies build and boost their online presence through iPresence Digital Marketing, Inc. Read my About Me page.
Jaycee De Guzman

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