Young, lower-income Filipinos flock to stocks searching for better profits

MANILA, Philippines — Local stock market trading is no longer just the playground of the affluent as interest is cascading to lower-income and mostly younger Filipinos, thanks to the boom in online trading platforms during the prolonged pandemic.

For the third straight year, online stock market accounts outpaced traditional accounts in 2020, the year when the pandemic further accelerated migration to digital financial service platforms. These accounts represented 67 percent of total trading accounts in the Philippine Stock Exchange (PSE).

Online accounts surged by 19.7 percent to 936,200 while non-online accounts rose by a meager 3.3 percent to 460,553. In 2019, online accounts comprised 782,118 of total stock market accounts while non-online accounts stood at 445,920.

“The preference for opening online accounts continues to rise since technology has made investing more accessible to investors. At the PSE, we also continue to enhance and develop online services that will benefit the investing public,” PSE president and chief executive Ramon Monzon said in a press statement on Wednesday.

In terms of age, investors in the 30-44 age group held 45.6 percent of stock market accounts. Younger adults aged 18-29 accounted for 22.5 percent, while the more mature age brackets of 45-59 and 60 and above accounted for 19.8 percent and 12.1 percent, respectively.

Retail investors earning less than P500,000 annually cornered 61.2 percent of stock market account holders, while 21.6 percent of retail accounts were owned by those with an annual income of P500,000 to P1 million. Investors with annual income of above P1 million comprised 17.2 percent of retail investors.

Despite a challenging environment that dragged down the economy to a record recession and resulted in massive job losses in 2020, the percentage of investors earning less than P500,000 a year even increased from 59.4 percent in 2019.

Total stock market accounts grew by 13.7 percent to about 1.4 million last year from 1.23 million in 2019. This means that about 1.27 percent of Filipinos now invest in the stock market. While this is still a small fraction of the population, this has improved from less than 1 percent in previous decades.

Retail investors held 97.9 percent of total stock market accounts while institutional investors owned 2.1 percent.

“We noted that there was a 35.6-percent increase in the number of active accounts last year. The pandemic prompted retail investors to actively participate in the stock market,” Monzon explained.

In 2020, average daily number of trades rose by 33.7 percent while retail participation surged by 47.8 percent year-on-year. As the local central bank slashed interest rates to record lows to help stimulate the pandemic-bludgeoned economy, more investors turned to the stock market in search of better returns.

Based on the 2020 Stock Market Investor Profile (SMIP) Report on retail investors of the PSE, 50.8 percent of stock market account holders were males while females accounted for 49.2 percent.

Domestic investors had a 98.3-percent share of stock market accounts while investors based overseas held the remaining 1.7 percent.

Most domestic investors were based in Metro Manila, with a share of 75.7 percent, followed by those from other parts of Luzon with 13.5 percent. Those from Visayas and Mindanao accounted for 5.7 percent and 3.4 percent, respectively.

Of the foreign investor accounts, the top five were Chinese, Japanese, American, British and Korean.