OUTSIDE THE BOX
THE Philippine Stock Exchange (PSE) reached a historic high again yesterday. Our local stock market is one of the best performing in the world for 2012, up 15 percent. And it is almost common to find issues that are up in price by 25 percent and more. I am not talking about the speculative stocks. I am speaking of companies like Ayala Corp., which by definition is supposed to be boring and conservative. The less conservative companies have doubled in price.
Yesterday around the Twitter world were a few comments about why more Filipinos do not invest in the PSE and reap these bountiful rewards.
The truth is, unfortunately, Filipinos do not invest in the Philippine stock market for many of the same reasons that foreign money does not invest in the Philippines. Go with me on this and I think you will see what I mean, especially if you are currently a local stock investor.
It is difficult to do business.
We all know that the Philippines rates as one of the most unfriendly places on the planet to set up and run a business. This is nothing new. The Philippines’s global score has not improved much at all over the last 20 years. The nation’s motto should be “You want to do business? Fight harder in the Philippines.” It is not much easier to open a stock trading account for the PSE.
Securities and Exchange Commission rules must have been created before the invention of the personal computer and the Internet. A Filipino can open an account online to trade stocks, foreign currency, and commodities overseas, scan original identification documents and email them, and deposit trading funds. Opening an account with a PSE stockbroker requires several courier deliveries. Granted, the local stockbrokers do everything they can to facilitate this process but it is still old style when people actually used the post office and mailed documents.
You can go to a Pagcor casino or e-games facility, bet millions, and they do not even require identification.
If you are a balikbayan Filipino in another country who wants to invest on the PSE, plan on a month of correspondence.
It is a matter of education.
Most foreigners still do not have a clue about the Philippines and its opportunities. In truth, it was foreigners, not Filipinos, who sold the Philippines as an outsourcing destination to other foreigners. The new tourism slogan is not a slogan. It sounds more like a campaign promise. “Exotic Thailand.” “Malaysia, Truly Asia.” “Japan: Endless Discovery.” Those are slogans. Even the New York Stock Exchange has a slogan: “One Market. Infinite Possibilities.”
Yes, the PSE has tried its best to educate Filipinos about the stock market. But education is also about marketing your product. And the PSE does not market the stock market well at all.
The perception is that it is corrupt and crooked.
In the foreigners’ mind, the Philippines must be a very crooked country since the administration said that the only reason the country was poor was because of corruption. Maybe that is right. But that same perception runs in the stock market.
Trading on the PSE is not crooked or corrupt. However, there are some side issues that certainly give that impression. Can you always trust what every company says about their business prospects? Absolutely not!
One company throughout 2011 made disclosure after disclosure to the investing public through the PSE that were simply not true. The system requires that companies tell all. It does not validate if they are telling all the truth.
It is one thing to say that the PSE does not have responsibility to check every disclosure by every company for authenticity. However, when the PSE is informed with facts that a company has not been completely truthful or even downright lied, a statement should come from the PSE itself and sanctions be implemented. It is wrong not to do that.
We have a great wealth-creating mechanism called the stock market and a valuable institution called the PSE. It works properly. It is fair and honest. It is available to almost all people with extra money either through direct trading or mutual funds.
We have one of the lowest stock-market participation rates in the world and there is truly no excuse for that.
On a personal note, my half day Stock Trading Seminar will be on March 24th.
The content will focus on Stock Picking, Trading Techniques, and basic Technical Analysis to identify Trends and Price Points. The fee for the seminar will include snack, lunch and materials.
I will need your confirmed reservation no later than today, March 15, 2012. Sorry but this is your last chance. Please e-mail email@example.com with your reservation.
E-mail to firstname.lastname@example.org and Twitter @mangunonmarkets. PSE stock-market information and technical-analysis tools provided by CitisecOnline.com, Inc.