October 27, 2008

Major hiccup at the stock market

I NEVER thought Ayala Corp. would drop to P200 per share this fast. Parang it was only yesterday that it was selling at P250. But the market crashed today, dropping by 10% which triggered the circuit breakers to halt the trading session. Whew! Then after resuming, the market slipped even further closing at 1,713.83 points. This was the single biggest day drop since July 1987.

Banco de Oro was probably the hardest hit, falling by 23% to P22.75. It had just reported its third-quarter loss because of the covers it allocated to its credit exposure in Lehman Brothers. Belated reaction dontcha think? But actually ever since BDO merged with Equitable, the income of the unibank has been unsteady because of expenses owing to the merger and the expansion of some of its units. So if you think about it, the situation isn't really that bad. The situation was just aggravated by the losses from Lehman's. And tapos na 'yan. The losses are booked. Period.

But the first nine months of the year actually was still profitable for the bank. Check out the press statement here. It was just lower than the same period last year. But Christmas looks promising because I know the BDO consumer lending business has been very strong. Loans were up 35%, deposits too at 32%, and from what I know from my sources, the bank is still in a hiring mode. So in short, there is no reason to worry, especially if you are a BDO depositor. In fact, with the extensive holdings of the Sy family in a diverse array of businesses, we are assured of a steady stream of income from any of the Sy companes. I even once told a friend that the Bangko Sentral can very well fold up, but not BDO. These guys have money. Lots of it.

Okay. Now I'm waiting for Ayala Corp. to fall to P120, then I'm buying. If you've got extra cash kids, check out those stocks. Many of them are already trading at a bargain. I am predicting an upswing after the Nov. 4 elections in the U.S. and Barack Obama is proclaimed the winner. So start looking through the stock market page, but choose wisely.

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