Online stock trading gaining ground in PH

Online stock trading is gaining momentum in the Philippines, a country where only a small portion of the population is invested in or even familiar with the stock market.

Based on the annual Philippine Stock Exchange (PSE) report on stock market accounts, online trading accounts went up by 27.8 percent to 302,516 in 2016 from 236,669 in the previous year.

Meanwhile, the growth in the total number of stock market accounts, which include both online and traditional accounts, was 8.5 percent. As of end-2016, there were 773,187 stock trading accounts in the PSE.

The segment that engages in stock trading still accounted for less than 1 percent of the country’s more than 100 million population but accessibility of online stock trading platforms is seen allowing the PSE to increase its penetration in the years ahead.

“Technology has played a big role in the growth of our investor base over the years. We are pleased to see that more Filipinos have continued to adopt online trading to invest in the stock market,” PSE president and chief executive Ramon Monzon said.

Based on the PSE’s numbers, 39 percent of total stock trading accounts now use online trading platforms instead of traditional channels.

Investors with online accounts trade stocks themselves, typing in their buy or sell orders on their online trading platform whereas investors with accounts in traditional stockbrokerage firms have to call their broker to place their orders.

The minimum required amount to open an account and the broker’s fee of online stockbrokerage firms are usually lower than their traditional counterpart.

Online investors are typically provided with research materials by their online broker while investors of traditional firms also get research reports and directly discuss their investing options with their broker.

The PSE reported that the continued growth in online accounts was translating to higher trading activity. In 2016, online accounts accounted for 53.7 percent of total market transactions—measured in terms of number of trades. This was the first year that online transactions were responsible for more than half of the market’s total transactions. Online trades registered a 41.4-percent growth in value turnover, which translated to a 9.3-percent share in the market’s total value turnover.

Of the total stock market accounts, 98.2 percent or 759,952 were held by local investors while the remaining 1.8 percent or 13,595 were accounts of foreign investors.

The PSE’s 2016 stock market investor profile survey showed that among the retail investors using online and traditional brokering, 43.7 percent earn less than P500,000 annually. This was followed by the segment of investors earning above P1 million at 31.1 percent while investors with an annual income of P500,000 to P1 million made up 25.2 percent of the total retail investors.

In terms of age, close to 40 percent of investors were aged 30 to 44. The 45- to 59-year-old investors covered 26.4 percent of the total while those who are 60 and above comprised 19.3 percent. The young millennials or those between 18 and 29 accounted for 14.8 percent.

Among online investors, close to three quarters were aged 18 to 44 years. Specifically, 21.7 percent were in the 18- to 29 year-old range, 52.9 percent were 30 to 44 years old, 18.4 percent were in the 44-60 age group while the remaining 7 percent were senior citizens aged at least 60 years.

In terms of geographic location, 96.1 percent of PSE’s total retail investors were based locally while the rest were from overseas. Most of the retail investors, accounting for 70.6 percent, were based in Metro Manila. Luzon cornered 16.4 percent of investors while Visayas and Mindanao made up for 6.2 percent and 2.9 percent, respectively. Overseas-based investors comprised 3.9 percent of retail accounts.

“We are pleased with the continued growth of stock market investors in the market. Clearly, we have a long way to go and we at the PSE will continue our financial literacy programs to demystify stock market investing and make investing as understandable and accessible as bank or insurance products,” Monzon said.