PSE: Locals dominate trading, foreign transactions rise

Local investors continued to grab the lion’s share of trades in 2009 while the number of foreign investors in the stock market was notably higher as sentiment over the recent global economic crisis eased, a study by the Philippine Stock Exchange (PSE) showed. The study revealed that local investor accounts increased 6.7 percent to 469,467 accounts in 2009 from 440,104 accounts a year ago. These comprised 98.6 percent of the total investor accounts registered at the PSE in 2009. Data was gathered from a survey of 132 active trading participants submitted last December. Total investor accounts, meanwhile, rose 7.1 percent to 476,194 accounts from the previous year’s total of 444,680. Of this, foreign investor accounts only represented 1.41 percent or 6,727 accounts. Still, foreign investor accounts grew by a remarkable 47 percent in 2009 from 4,576 accounts in 2008. “One of the biggest challenges for the PSE with regards to enticing investor interest remains the limited liquidity of issues. To address this, the PSE has reinstated the rule requiring listed and listing applicant firms to meet a minimum 10 percent public float to maintain their listing status with the PSE. The rule has been submitted to the Securities and Exchange Commission for approval," Hans B. Sicat, PSE chairman, said. Retail investors Retail accounts owned by individuals grabbed 94.4 percent or 449,545 of the total investor accounts in 2009. The remaining 5.6 percent or 26,649 were institutional investor accounts held by corporations. “This is a reflection that the PSE’s efforts on market education are bearing fruit. The stock market is slowly being noticed as a viable investment medium despite the economic crisis. This should further motivate us to reach out to the public given that the total retail accounts represent just 0.49 percent of the country’s total population," Val Antonio B. Suarez, PSE chief operating officer, said. “Also, the challenge for us is to further enhance our institutional investor base which already grew significantly in 2009 by 38.8 percent," Suarez added. Of the total local accounts, 443,780 were retail, while 25,687 or only 5.5 percent were institutional. The ratio of foreign institutional accounts to retail accounts was also small with only 962 accounts or 14.3 percent of the total foreign investor accounts. However, foreign investors’ accounts were more active than the local investors in 2009. Active accounts are defined as accounts that traded at least once during the year. Foreign active accounts grew by 77.4 percent to 2,545 in 2009 from 1,435 in 2008. Local active accounts grew by 9.5 percent to 105,765 from 96,604 in the previous year. The PSE continues to pursue a number of market education initiatives such as integrating capital market topics in high school and for college students through business administration courses. The PSE is also studying the possibility of institutionalizing a degree program that is focused on capital markets. “By introducing the capital markets at an early stage in the Philippine education system, we are striving to form a base of future investors or at the very least, individuals educated about the capital markets. We are helping the public realize the importance of savings and investments which also redounds to several economic benefits," Suarez explained. Gender terms The PSE study also revealed that in terms of gender, the stock market was equally attractive to both male and female investors with male investors edging out female investors by a small margin. Total male investor accounts amounted to 69,589 or 56.4 percent during the period compared with 53,732 female investor accounts which represented 43.57 percent. The data was gathered from a total of 82 brokers. In terms of annual income, individuals earning between P500,000 to P1 million annually comprised 41 percent of retail investors. About one-third or 33.8 percent of investors earn less than P500,000 a year. The remaining 25.3 percent of investors earn more than P1 million a year and were considered the most active. Data on the annual income of investors was gathered from 77 brokers. "The stock market is beginning to attract a diverse group of investors from all income levels," Suarez noted. In terms of age, a large chunk of retail investors belonged to the 45 to 59 years bracket at 40.9 percent. In terms of profession, most retail investors were professionals and were engaged in the services sector which comprised 24.3 percent and 24 percent respectively. Furthermore, most local retail investors or 86.5 percent were based in Metro Manila. Online accounts also increased by a remarkable 46.8 percent to 28,261 accounts from the previous year’s 19,246 online accounts. Most online investors were also active traders. Data on online accounts was provided by nine brokers. In terms of the number of trades, online trades accounted for 12.8 percent of the total 4.09 million trades registered in 2009. In terms of value however, online trades accounted for only 3.72 percent of the total value of P1.32 trillion. “What is interesting to note from the study is that most of the retail investors trading online earn less than P500,000 a year and more than half of them were 30 to 44 years of age. This group of investors is now presenting a high growth sector for our trading participants," Suarez said. PSE operates the only stock exchange in the Philippines with 250 listed companies and 132 active trading participants. —VS, GMANews.TV