Q. Is PSE accepting over-the-counter transactions?
A. Over-the-counter transactions are made outside the jurisdiction of the PSE.
Q. How do other economic indicators affect the market?
A. Interest rates, foreign exchange, inflation, growth rates - these are some other economic indicators which affect the performance of the stock market. Favorable growth and inflation rates as well as stabilized interest rates and foreign exchange are good news for the stock market. They usually give a kick on the market performance as these indicate sound economic status. Soaring interest rates, on the other hand, usually pushes investors from the stock market to some interest-bearing investments, as they offer better returns than stock investing.
Q. Why was there a unification of the two bourses?
A. The two exchanges, while considered as separate entities, were basically trading the same listed issues. The idea of uniting the Manila Stock Exchange and the Makati Stock Exchange and have it managed by a professional group became a main thrust of the government of then President Fidel Ramos. The unification was geared towards the development of a more efficient capital market.
Q. Where is PSE located?
A. The main office and principal trading floor is located at the PSE Centre, Exchange Road, Ortigas Center, Pasig City. An extension trading floor and office is located at Tower 1 and Exchange Plaza, Ayala Avenue corner Paseo de Roxas, Makati City.
Q. Where can I get information about the stock market?
A. The PSE maintains a Library which is open from 9:00 am to 4:00 pm from Monday to Friday. Broadsheets also contain information about daily trading results and updates on listed companies.
Q. What is the trading system being used by PSE?
A. The PSE uses what is known as the Maktrade system.
Q. How does PSE regulate trading activities?
A. PSE regulates trading activities through the Floor Trading and Arbitration Committee which consists of PSE members. The committee oversees the proper conduct of trading activities in the Exchange from electronic trading to clearing and settlement activities. It reviews and recommends appropriate trading and settlement rules as well as regulate trading personnel.
Trading activities are being monitored through the surveillance terminal to ascertain that there are no illegal postings and dealings made in any of the issues listed in the Exchange. Through the Compliance and Surveillance Group, compliance of members to set rules and regulations are monitored.
Q. Who are the market players?
A. They are the public, the trading participants, listed companies, underwriters, investment houses, central depository, clearing agencies and the securities clearing company.
Q. Why do companies go public?
A. The primary purpose for the public listing of a company is to increase capital in a cost-effective way. It reduces the company’s reliance on the traditional financiers such as financial institutions and individuals. Listing allows business expansion without increasing borrowings or draining the company’s cash reserves.
Q. How can PSE protect investors from price manipulation?
A. The PSE has a Surveillance unit which monitors price manipulation and similar offenses to safeguard investors.
PSE also enforces a price freezing limit. Whenever the share price of an issue moves 50% up (price ceiling) or 40% (floor price) down on a particular day, to be reckoned from the last closing price or the last posted bid price, whichever is higher, the price of the issue or stock shall be automatically frozen by the Exchange upon reaching said limit, unless there is an official announcement from the company or the proper government agency which would justify such price fluctuations.
Q. How do I know that my order has been executed? What happens after the execution of order?
A. Trading orders are more often done through the telephone. Investors’ buy or sell orders are relayed to the broker’s authorized traders on the trading floor. In an automated system as in PSE, the order is keyed in through a trading terminal and automatically matched.
Verbal confirmation of executions are made as soon as possible and subsequently an official confirmation or invoice is delivered to the client.
Q. Do I need to keep track of my investment?
A. Yes, you should spend some time and effort in studying your investment. You should keep track of the stock price and follow closely the developments of the company. This way, you are able to foresee possible gain or loss and thus make sound and wiser investment decisions.
Q. What are the measures of market performance?
A. There are four indicators of market performance:
Q. What influences market movements?
A. General investors’ sentiment indicates the direction of the market movement. The over-all market sentiment, on the other hand, is influenced by a number of factors – economic, political, fiscal, etc.
Q. What are the types of securities that I can buy in the stock market?
A. Most of the issues listed in the PSE are common stocks. Other types of securities such as preferred stocks, warrants and bonds are also traded.
Q. How do I make money in the stock market?
A. One can make money in the stock market through the price appreciation (capital gains) of his shares or through cash or stock dividends. A shareholder can also benefit from stock rights.
Q. Where can I buy stocks?
A. An investor can buy stocks listed on the PSE through its authorized and active trading participant.
Q. How are shares bought or sold?
A. If you wish to buy shares of stocks, you must have a broker who will do this for you since PSE is not directly involved in the buying and selling of securities.
Q. When can I buy stocks?
A. Trading is done at the PSE trading floor during weekdays from 9:30 a.m to 12:10 p.m. except during legal and special public holidays.
Q. Is there any risk involved in investing?
A. While it is true that stock investment is the most volatile of all securities, investors might well remember that uncertainty is a permanent feature of the investing perspective. This means that risk is always a part of any investment. A better attitude would be to limit and manage your risk. A maximum level of gain or loss should be set, and calculated decisions should be made when this level is reached.
Q. Why invest in the stock market?
A. There are 3 rationale for stock investing:
Ownership in a company - when an individual invests in the stock market, he automatically becomes a stockholder of a particular listed company. As a stockholder, he is entitled to the following benefits: a.1) voting rights; a.2) dividends to be declared by the corporation; and a.3) share of the remaining assets of the company if it is to be liquidated.
Liquidity of Funds – a stock market investor has an easier access to funds. Compared to banks which require high minimum conditions for deposits and credit, an individual can start an investment for as low as Php 1,000 and can expect high yields for his initial investment. He can always cash in or out his funds anytime, during trading hours, through his broker.
Make money – investors in the stock market make money through dividends and capital appreciation. When a listed company declares dividends, its shareholders increase their investing power. An investor who buys into the company at a low market price and sells it at a higher price will gain capital appreciation.
Q. What is the minimum amount of initial investment?
A. The minimum amount of money needed to invest in the stock market depends on the minimum number of shares to be traded for the stock. The minimum shares will be determined by the prevailing market price of a particular stock. For each stock, the minimum number of shares to be traded is fixed and depends on the price range of the stock. The Board Lot table shall aid the investors as to the amount of money needed as initial investment.
Q. How do I choose my broker?
A. An individual investor should choose a retail broker, preferably one that meets his requirements in terms of services needed. When he lacks the time to analyze individual companies and stocks, then a full service broker is recommended. In choosing a broker, the investor should see to it that the broker is a member of good standing at the Philippine Stock Exchange. It is important that the investor should trust his broker and that he is satisfied by the services it is giving him, such as market reports, quality of advice regarding stock selection and timing of purchases and sales, quality of trade executions, on-time delivery of important documents and other services.
For information on the various services offered by member-brokers, you may get in touch with he PSE Public Information and Assistance Center (PIAC).
Q. Do I need to have a physical evidence of my stock ownership?
A. The PSE through its central depository (PCD) uses the computerized book-entry system (BES) to transfer ownership of securities from one account to another, thus eliminating the need for physical exchange of scrip between buyer and seller. The trading system where settlement is carried out via book-entries, rather than by the movement of physical certificates. This system is called scripless trading. However, you may still request for an upliftment of your shareholdings to get a physical certificate.
Q. How are settlement and clearing done?
A. Equity securities move between securities accounts held by the different participant-brokers of the PCD. Stock market transactions are settled on the third day after the trade. Transfers are based on trades done at PSE. Shares are transferred on settlement date (T+3) to the buyer, and the buyer pays the seller through the clearing banks within the same settlement period. This means that transactions done on Monday must be settled by Thursday. Settlements of accounts are done in the clearing house.
Q. What are SDT- Bonds?
A. Small Denominated Treasury Bonds or SDT-Bonds are long term debt securities issued by the Bureau of Treasury of the Republic of the Philippines. The bond is an evidence of indebtedness of the Republic of the Philippines to the owner of the SDT-Bonds.
Q. How are SDT-Bonds different from an ordinary corporate bond? From an ordinary Saving account?
A. SDT-bonds differ from corporate bonds in terms of risk profile of the Issuer. SDT-Bonds have the full backing of the Republic of the Philippines, making it risk-free. On the other hand, corporate bonds entail higher risk that the Issuer may default on its obligations depending upon its stability. Further, compared to an ordinary savings account, SDT-Bonds are by far superior in terms of interest earnings.
Q. Why should I invest in SDT-Bonds?
A. SDT-Bonds are direct and unconditional obligations of the Republic of the Philippines to the holder. This makes the bond a prime collateral should the bondholder need to borrow money from a bank. Further, SDT-Bonds has a fixed coupon rate of 13.625% per annum, paid quarterly. This is among the highest yield that an investor can get from fixed-income securities.
Q. How do I get my interest earnings from bonds?
A. The interest earned from the investment will be credited to the bondholders account quarterly.
Q. What would be my proof of ownership if I invest in SDT-Bonds?
A. The SDT-Bonds will be registered in the Bureau of the Treasury’s (BTr) Registry of Scripless Securities. Since the transfer of securities shall be done electronically, confirmation slips shall be issued in lieu of the bond certificates as evidence of ownership.
Q. If I want to cash-in on my investments in the SDT-Bonds, do I have to wait for the maturity date?
A. An investor need not wait for the maturity date of the bond to recover his investments. Since the bonds shall be listed and traded on the Philippine Stock Exchange, he may sell the bond on the Exchange prior to maturity date.
Q. How do I start investing in SDT-Bonds? What is the minimum amount of investment?
A. Just like an ordinary savings account, an investor has to open an account and present valid identification with a broker before he can actively trade SDT-Bonds on the Exchange. An investor would need at least the minimum amount of investment which is Php 5,000.00.
Q. How is the SDT-Bond quoted on the PSE?
A. The price of the SDT-Bonds will be quoted as a percentage of its face value up to the sixth decimal place. For example, a bond with a face value of Php 5,000 is quoted at 99.000001. The market value of the bond is Php 4,950.00005 (5,000 x 0.99000001)
Q. What are the factors that could affect SDT-Bond prices?
A. The most important determinant of bond prices is the level of prevailing interest rate. As a general rule, the price of a bond tend to increase if prevailing interest rates fall and tend to decline as the interest rate increase. Other factors which could affect bond prices thru the level of interest rates are business cycle, inflation rate and flow of funds.
Q. Are all member-brokers allowed to trade SDT-Bonds?
A. Not all brokers can trade SDT-Bonds. As of 30 April 2003, there are at least 24 brokers accredited and allowed to trade SDT-Bonds, these are:
Abacus Securities Corporation
DBP-Daiwa Sec. SB Cap. Markets Phils., Inc
G. D. Tan and Company, Inc.
JSG Securities, Inc.
RCBC Securities, Inc
Wellex Global Equities, Inc.
BA Securities, Inc
F. Yap Securities, Inc
ICG Securities, Inc
Lucky Securities, Inc
Solar Securities, Inc
Worldsec International Sec. (Phils.), Inc.
I. Ackerman & Company, Inc.
A & A Securities, Inc.
Triton Securities Corporation
First Integrated Capital Securities, Inc.
Goldstar Securities, Inc.
Tansengco & Company, Inc.
Angping & Associates Securities, Inc.
Astra Securities Corporation
Globalinks Securities & Stocks, Inc.
Regina Capital Development Corporation
S.J. Roxas & Company, Inc.
Deutsche Regis Partners, Inc.
Q. How long is the settlement period for SDT-Bonds?
A. Unlike stocks which are settled three days after the transaction date (T+3), trade on the SDT-Bonds shall be settled on the same day (T+0) when the trade is transacted.