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Update on COL Model Portfolio as of 16 July 2015

If you are doing cost averaging and you are at the same time following Colfinancial.com‘s Model Portfolio, here’s our regular update on the stock prices:

Note that the below COL Model Portfolio is based on the latest COLing the Shots report released last June 30, 2015 entitled Why we shouldn’t worry about a Greek default.

If you’re curious about the changes in the COL Model Portfolio, see tables below:
COL Market Outlook:

COL Model Portfolio last January 2015

April 2015 Model Portfolio

May 8, 2015 Model Portfolio:
May 29, 2015 Model Portfolio 
June 30, 2015 Model Portfolio (latest)
As of Thursday, July 16, 2015 here’s the status of the COL Model Portfolio.

The Return refers to potential return from Current Price to FV.

Current   FV BBP Return Remarks
AC 763 877 701.6 14.94% Above BBP
MBT 91.5 109 87.2 19.13% Above BBP
SMPH 21 23.6 18.88 12.38% Above BBP
FGEN 25.45 36 28.8 41.45% Below BBP
CEB 88.25 156 124.8 76.77% Below BBP
FLI 1.96 2.42 1.94 23.47% Above BBP

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FGEN and CEB are tagged as BBP (buy below price).
The BBP’s are adjusted based on the latest COLing the Shots report.
In the latest model portfolio, URC is removed (please see reason below).
As you can see, the FVs and the BBPs did not change since the previous model portfolio.

Permission has been granted by broker Colfinancial.com via email to share the above model portfolio publicly.

Why we shouldn’t worry about a Greek default

  • There is a possibility that the PSEi could weaken substantially again given concerns of a possible Greek default and exit from the Eurozone which could lead to a contagion in global financial markets. Just last week, Greek Prime Minister Alexis Tsipras refused to accept a bailout plan from its creditors and instead called for a July 5 national referendum, giving Greek citizens the power to decide whether or not to accept the austerity measures being demanded by creditors in exchange for additional financial support. Global equity markets were sold off yesterday in reaction to this development leading to a 2.1% drop in the MSCI world index. 
  • Nobody knows whether or not Greece will default. There is a strong possibility that the Greeks will vote to accept the demands of the creditors given the dire consequences of a Greek default and Grexit. Consequences include shortage of basic goods, massive inflation, sharp rise in interest rates, and significant depreciation of the currency. 
  • Nevertheless, assuming that a Greek default materializes, we think there is less risk of a contagion in financial markets compared to a few years ago. Note that the private sector currently only holds around 15% of Greece’s total debt of €316 Bil. Moreover, the EU is better equipped to cope with financial contagion. For example, it established the European Stability Mechanism or ESM in 2012 (with a lending capacity of €500 Bil) to provide financial assistance to member states experiencing financial difficulties. During the same year, the ECB also launched the Outright Monetary Transactions (OMT) program, enabling the central bank to purchase sovereign bonds of Eurozone members that are being traded at distressed levels. As a reflection of lower contagion risk, the yields on the sovereign debts of other peripheral European countries continued to go down despite the increase in Greek interest rates. Although the rates on periphery European debts started to climb lately, they remain well below their 2012 levels. 
  • Admittedly, there could be a flight to safety in the short term as investors stay on the side lines until the Greek situation comes to an end. Global equity markets could be sold off while investors shift to the traditional safe havens such as the U.S. dollar and U.S. dollar bonds. Nevertheless, assuming that global equity markets fall sharply because of concerns of a Greek default, investors should not be worried and view the sell-off as an opportunity to buy stocks more cheaply. We do not expect the problems to last, and this should allowing equity markets to recover quickly. 
  • Despite URC’s strong performance during the past month, we are removing it from our COLing the Shots stock picks list. When we visited URC earlier this month, we learned about the intensifying competition in the coffee industry and the weakness of sales in the Visayas and Mindanao areas. The said factors could hurt URC’s ability to meet our earnings forecasts for this year and make it difficult for the stock to continue outperforming the market. 

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Market Summary:

Market retests 7,600 level

July 17, 2015
Philippine Daily Inquirer
Doris Dumlao-Abadilla

The local stock barometer sustained its winning streak for the sixth straight session, retesting the 7,600 level, on investor optimism on the upcoming second quarter corporate reporting season.

Ahead of a long weekend break, the Philippine Stock Exchange index racked up 58.09 points, or 0.77 percent, to close at 7,617.13. Across the region, stock markets were mostly firmer even as US Federal Reserve Chair Janet Yellen confirmed prospects of a US interest rate hike within this year.

For the shortened trading week, the PSEi gained a total of 224.54 points or 3 percent. (The stock market is closed Friday in observance of the Eid’l Fitr, or Feast of Ramadan).

“I think people are positioning ahead of the second-quarter earnings (reports) and ahead of President Aquino’s state-of-the-nation address (Sona) on the 27th,” said Manny Cruz, chief strategist at local stock brokerage Asiasec Equities.

Although there was still net foreign selling, Cruz said the selling pressure had abated, allowing the market to sustain its upswing for the sixth consecutive session.

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