September 24, 2018
Tapping the Untapped Market in the Philippine Financial Sector
Reaching Out to the 99% of Filipinos Not Investing in the Stock Market
Aside from its great beaches, mountain trails, food and climate, the other best thing we love about our country is that it has the Philippine Stock Exchange. It is a venue for value-investing, and we are fortunate to have the PSE make our savings work for us on top of the income we realize from our regular job/(s) and/or business/(es). The PSE is a venue for all people without prejudice of race, religion or the amount of money deposited in one’s bank account.
That is why we get disappointed or are saddened whenever we see in the news or hear people complaining about inflation and how they stage rallies asking the government to bring down fares and prices of goods. Coming from Part 1 of our article, 99% of Filipinos do not invest in the stock market. This is equivalent to 105.6 mn Filipinos that could have shielded themselves against inflation and invested and grew their savings.
There have been efforts to tap this huge market worth PHP915.5 bn. This is the savings generated by this market from Part 1 (Please scroll down below to see Part 1 estimating how significant the market is). This can also generate commission income of PHP2.3 bn for stock brokerage firms when this amount of savings is used to buy stocks. Successfully tapping this market can make this sub-sector of the financial sector grow as 131 of them currently fight over the market worth PHP9.25 bn or only 1% of what the market can be.
One of the efforts made to tap into this market is the introduction of online trading systems. There are 26 online stock brokers as of this date. In relation to this, stock brokerage firms also use social media and cable TV to attract the public into the Philippine stock market. The main weakness of these efforts, however, is that a big portion of the 99% aren’t tech-savvy. They also generally use social media for entertainment and communication and watch TV Patrol and GMA News instead of Bloomberg or ANC. As a result, these efforts end up as a convenient option for the 1% already participating in the stock market.
Another effort to tap the 99% is the good old fashioned manner of reaching out to them. Some stock brokerage firms offer public seminars, grand and less grand stock market briefings and even present the importance of investing in stocks to various groups such as religious organizations, BPO employees of BPO firms and Overseas Filipino Workers (OFWs) groups based in the Middle East and other areas abroad. There is even a group we learned that collects PHP5,000 monthly from OFWs to be used to regularly buy stocks for them.
These efforts of reaching out and servicing the 99% have been around for some time now but have not really reduced the 99%. The main comments and complaints we have gathered is that there is no continuity after the presentations or after they have bought stocks. They are likewise not aware of what their yields or returns are year-to-date and/or from the inception of the stocks they bought. The 99% is also wary of the volatile swings of the stock market though presentations given to them explain this volatility.
This article was written not only to inform about the efforts made to tap the 99% but to initiate other efforts to effectively get Filipinos to participate in the stock market. For us, the stock market is the best venue to shield one’s self against inflation and grow one’s savings significantly.
If they can only see the line graphs below of the Philippine economy and the PSEi since 1993, the year after the merger of the former Manila and Makati Stock Exchanges. Even during tumultuous times, the Philippine economy has grown sure and steady, and while the PSEi had its ups and downs, it has grown along with the economy in one trend-line heading northeast. The PHP20 tn Philippine economy was also just almost PHP10 tn ten years ago.
Imagine if the 99% invested in that burger chain with the happy bee for its logo or the shopping mall chain that started in North EDSA during the time of capital flight in the Philippines when they were listed. The cash dividends and the share price appreciation from these companies would have grown their savings significantly throughout the years.
We think that an approach as a wealth manager utilizing value-investing, and not trading, is a good way to tap into the 99%. We’ve started this in a small way and have realized small success along the way. We hope to be able to let the 99% know about the benefits of the Philippine stock market so that they can gain from it.
This report is solely for information. It should not be constituted as an offer for solicitation for the purchase or sale of securities mentioned. The information herein has been obtained from sources believed to be reliable. Whilst every effort has been made to ensure accuracy, we do not guarantee the accuracy or completeness of the report. All opinions and estimates expressed herein constitute our judgment as of this date made on a reasonable basis and are subject to change without notice. No liability can be expected for any loss arising from the use of this report or its contents. As this is general information, it does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may obtain this report. Pictures in this report cannot be copied or redistributed and are owned by Corpecon Research.