investing in the philippine stock market

PHILIPPINE

STOCK

EXCHANGE

MAJOR STOCK EXCHANGES ECONOMY STOCK EXCHANGE

US & EUROPE NYSE

US & EUROPE (NORTH) NASDAQ

JAPAN TOKYO STOCK EXCHANGE

UNITED KINGDOM LONDON STOCK EXCHANGE

EUROPE EURONEXT

CHINA SHANGHAI STOCK EXCHANGE

HONG KONG HONGKONG STOCK EXCHANGE

CANADA TORONTO STOCK EXCHANGE

BRAZIL BM&F BOVESPA

ECONOMY STOCK EXCHANGE

AUSTRALIA AUSTRALIAN SECURITIES EXCHANGE

GERMANY DEUTSCHE BORSE

SWITZERLAND SIX SWISS EXCHANGE

CHINA SHENZHEN STOCK EXCHANGE

SPAIN BME SPANISH EXCHANGES

INDIA BOMBAY STOCK EXCHANGE

SOUTH KOREA KOREA EXCHANGE

PHILIPPINES PHILIPPINE STOCK EXCHNGE

RUSSIA MICEX – RTS

BACKGROUND

• The Philippine Stock Exchange, Inc. ("PSE" or the "Exchange") is a private non-profit and non-stock organization created to provide and ensures a fair, efficient, transparent and orderly market for the purchase and sale of securities such as stocks, warrants, bonds, options and others. (Knowing the Philippine Stock Exchange, 1999)

BACKGROUND • At present, PSE maintains two trading floors -- one in Makati City

and another in its head office in Pasig City. Even with two trading floors, PSE maintains a "one-price, one-market" exchange through the MakTrade System.

ROLES

• brings together companies which aim to raise capital through the issue of new securities

• the PSE plays a vital role in the financing of productive enterprises that use the funds for growth and expansion of new jobs. It is therefore essential to the growth of the Philippine economy.

ROLES

• facilitates the selling and buying of the issued stocks and warrants

• It provides a suitable market for the trading of securities to individuals and organizations seeking to invest their saving or excess funds through the purchase of securities.

• the PSE has committed itself to:

(a) protecting the interest of the investing public; and

(b) developing and maintaining an efficient, fair, orderly and transparent market.

SIGNIFICANCE

• It provides and ensures a fair, efficient, transparent and orderly market for the buying and selling of securities for investors and stakeholders.

• It address public demand for speedy access to information on the securities market

• It offers transparency of listed companies and ensures full, fair, timely and accurate disclosure of material information from all listed companies.

SIGNIFICANCE

• It provides comprehensive market data, stock quotations, dividend declarations, trading activities, and other pertinent information on the PSE, trading participants, listed companies and other institutions.

• It is a critical factor in improving settlement efficiency, increasing market liquidity and development of derivative instruments.

(Knowing the Philippine Stock Exchange, 1999)

TRADING HOURS

• Playing of the National Anthem 8:45a.m. Pre-open Period 9:00a.m. - 9:30a.m. Calculation of Open Price/Market Open 9:30a.m. Regular Trading Period 9:30a.m.-12:00noon

1:30-3:30 pm

• A ten (10) minute extension from closing time shall be allowed to execute orders at closing prices.

Why do people start businesses?

PROFIT

When you make money in business, it is called a

profit.

Mathematically: Profit = Revenue – Cost

For example: If you buy an iphone for 10000 and

sell it for 12000, you made a profit of …

HOW DO YOU RAISE MONEY TO START A

NEW BUSINESS?

One way to raise money is to borrow money from a

bank. This money must be paid back.

You can also sell ownership

in the company. This

means you have other

people give you money

and they have a share in

the profits (and losses) of

the company. These

ownership shares are

called shares of stocks.

STOCKS

If you own shares of a

company, you can

sell them to other

people in the stock

market.

THE STOCK MARKET

The Philippine Stock

Exchange (PSE) is one of

these markets.

• The kind of money that the average investor should

put in the stock market is money that he or she

won’t be needing today, tomorrow, next year,or even

5 to 10 years from now.This is because you can

never exactly predict what the value of your

investment will be in the coming years. So even

though the average annual return on the stock

market (from 1989 to 2009) was 14% per year,

future returns are never guaranteed.

HOW MUCH MONEY DO I PUT IN THE STOCK

MARKET?

• The biggest problem that can arise with

investing is when your personal situation

forces you to suddenly sell your investments

for cash when the market is down. In order to

prevent the problem above, there are three

ways to protect your investments from a

sudden need of cash.

THE BIGGEST PROBLEM IN INVESTING

• 1. Protect yourself with insurance. This is to make

sure that when an accident happens (to you, your

loved ones, your car, home, or business) it will be

the insurance company that will be obligated to

pay for it. At the same time, you won’t need to

cash out on your investments.

• 2. Shield yourself with an emergency fund. An

emergency fund is a sum of money set aside just

for emergencies. The general minimum of this

amount is 6 months of your living expenses. This

is for the unexpected things in your life which

can’t or won’t be covered by insurance. So if you

• suddenly need money because you lost your

job, you can live off your emergency fund

untilyoufinda newone.

• 3. Only put in money you won’t be using for the

next 5 years. In order to be able to do this, you

should have a good grasp of the amount of

money you’ll be using.Don’t forget to factor in

the once a year expenses like birthdays and

holidays. When the 13th month pay isn’t

enough to cover for your Christmas expenses,

it would be very tempting to cash in on your

investments.

HOW MUCH TIME DO I NEED TO USE IN STOCK

MARKET?

©2011 CENGAGE LEARNING. ALL RIGHTS RESERVED. MAY NOT BE SCANNE D, COPIED OR DUPLICATED, OR POSTED TO A PUBLICLY ACCESSIBLE WEBS ITE, IN WHOLE OR IN PART.

STOCK MARKET BASICS

RIGHTS OF SHAREHOLDERS

24

• Shareholders (stockholders) have ownership

interest in the company proportional to shares

owned.

• Rights include:

1.rights to be ‘residual claimants’

2.voting rights influence management

STOCK PRICES

When a company is doing well, more people want

to buy the stock and its price in the market rises.

When a company is

not doing well, more

people want to sell

the stock and its price

falls.

DIVIDENDS

When a company makes a profit, they typically pay

the owners of stock a dividend.

WHAT CAUSES STOCK PRICES TO CHANGE?

• Supply and Demand

• Earnings and Expectations

• Sentiments and Attitudes

• Economic Indicators

• Follow the Leader (volume)

• Anything

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

HOW THE MARKET SETS PRICES

46

• The price is set by the buyer willing to pay the

highest price

• The market price will be set by the

buyer who can take best advantage of the asset

• Superior information about an asset can

increase its value by reducing its risk

15300+45.14=15345.14

15600+124.02=15475.98

WHICH STOCKS ARE YOU

GOING TO BUY?

WHAT IS YOUR STRATEGIES?

ies

GENERAL MARKET ADVICE:

1. Never chase a stock.

2. Buy when markets are in the grip of panic.

3. Only buy fundamentally strong stocks, which are

undervalued.

4. Buy stocks grown in top line and bottom line over

the past years.

5. Invest in companies with proven management.

6. Avoid loss-making companies.

7. PE Ratio and Growth in earnings per share are

the key.

8. Look for the dividend paying record.

9. Invest in stocks for sure returns.

10. Stocks have been the high yielding asset class over the past.

11. Stocks are an asset class.

12. The basic property of any asset class is to grow.

13. Buy when everyone is selling and sell when everyone buys.

14. Invest a fixed amount each month.

WHAT YOU MUST DO

Get rid of the junk

Diversify

Believe in your investment

Stick to your strategy

WHAT YOU MUST NOT DO

Don't panic

Don't make huge investments

Don't chase performance

Don't ignore expenses

PREPARED BY:

•ODIELON O. GAMBOA

“Take a RISK, if you win, you will be

happy, if you loose, you will learn”