Low retail participation has been ailing the Philippine Stock Exchange (PSE) for quite some time now, impacting the market’s liquidity.
A magic potion of sorts might be needed to rejuvenate and spur active participation, and PSE president and chief executive officer Ramon Monzon is keen on finding one.
If Monzon can have it his way, though, he would like to uncover and study the elixir behind strong retail participation in one of the country’s Southeast Asian neighbors.
‘What dictates liquidity basically is retail investing,’ Monzon told The STAR. ‘Vietnam, I read, is hitting $900 million a day of volume, and 80 percent of that volume is generated by retail investors. I keep telling my research team how can that happen?’
‘How can 80 percent of the $900 million be generated by retail investors? Where do they get the money when their per capita is $4,800? How can they trade such that 80 percent of the $900 million to $1 billion come from retail investors? I’m still trying to figure that out. But they must have a secret elixir that I want to learn,’ he said.
Monzon’s wish is to see increased liquidity in the market, and doing so will require a bigger role for retail investors.
‘We’re now about 17 percent retail participation. I really want to get it up again to the 20 percent plus level at least, initially,’ he said.
‘What am I counting on? Well, we have a lot of education initiatives with overseas Filipino workers, with the Commission of FIlipinos Overseas. We have the GCash (GStocks PH) getting more subscribers,’ the PSE chief added.
The PSE has been continuously working on helping equipped retail investors with investment know-how through its various investing literacy initiatives and partnerships.
In 2024, a surge in online accounts boosted the number of stock market accounts in the PSE by 50.1 percent to 2.86 million from 1.91 million in the previous year.
Retail investors comprised the lion’s share or 98.9 percent of total account owners, while institutional investors made up the remaining 1.1 percent.
While growth in retail accounts has been remarkable, the PSE admitted that the real challenge is getting retail investors to participate more actively in the market as they only contributed 16 percent to total value turnover in 2024.
To boost liquidity, Monzon said that the PSE is set to come up with a few new products next year.
‘We’re still targeting the depository rights,’ he said.
The PSE and the Securities and Exchange Commission have been working on the rules and regulations for the planned launch of the Global Philippine Depositary Receipts (GPDR).
GPDR is a peso-denominated instrument that represent economic, but not voting, interest in foreign-listed securities, with an option to convert to the underlying shares.
The listing and trading of GPDR are intended to provide local investors investment opportunities outside the Philippine market and allow them to build a globally diversified portfolio.
Monzon, however, noted that ‘for our company to get interest in Thailand or in Singapore, it needs to take off here first.’
‘So we’ve got to resolve this confidence, this sentiment issue. That’s why the corruption issue really needs to be addressed. Otherwise, it will weigh on the market,’ he said.
The PSE also intends to launch derivatives and is actively engaging with other exchanges and foreign market participants to support the development of a derivatives market in the country.
Monzon said they will be meeting with officials of Taipei Exchange this month.
‘We’re engaging them. We’re having learning sessions with them on derivatives. We’re also having learning sessions with Taipei Stock Exchange for the fixed income. I also want to have new products on Philippine Dealing and Exchange Corp. (PDEx),’ he said.
The PSE has acquired a majority stake in the Philippine Dealing System Holdings Corp., the holding company that owns the PDEx, which is the operator of the fixed income exchange.
‘So hopefully by next year we can harness or reap some benefits from the acquisition and get some synergies going,’ Monzon said.