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Philippine Stock Market Too often, people refer to the stock market as a gambler's den, an arena where only the sharpest and fastest parry with sophisticated weapons of information and analysis of choice. |
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For the uninitiated, how do we break the mystery of the stock market, which has its own critics and enthusiasts? Simply put, the stock market is a venue - just like your neighborhood market - where goods in the form of stocks are bought and sold. For companies and individual investors, it is an integral part of building capital, and in an ideal setting, could fuel the growth of small to huge businesses. Companies offer their shares to the public to raise capital. The funds generated are used to build new plants, or pay off debts, or perhaps buy new technology to improve production. |
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any listed company's revenues or losses. Juan has to be careful, because stock investments carry risks. Don't invest your life savings, or money saved for your children's education. There is only one rule on investing in stocks, and it is probably as old as the stock market itself: Buy low, and sell high. The problem is in determining what is "low" - Juan may buy when the price of a stock has fallen; but if the price continues to fall, he loses his investment. If the price goes up, Juan may sell and therefore make money. On this, there is another important piece of advice: "Don't be greedy." |
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Dennis Cheng, an IT professional in his mid-20s working for a global organization, says the stock market has given him some hard lessons in his three years of investing. Cheng decided to try the waters in the stock market in the second quarter of 1999, buying his first few shares in property firm Empire East Land Inc., a subsidiary of holding firm Megaworld Corp., formerly Megaworld Properties and Holdings Inc. "The market was bullish," Cheng recalls. "The index hit 2500 that year but when I came in it was doing between 1900 and 2000." He said that for a first-timer, somebody who was a complete greenhorn in the stock market with no background and dependent on self-study, it was safe to buy stocks using the "board lot" as a guide. The Philippine Stock Exchange has a master list of the minimum number of shares an investor can buy or sell at a specific price range called the "board lot." It is also called the "round lot system." "If you buy at below a peso, there is a minimum requirement of about 10,000 shares," Cheng explains. When volumes used to be far bigger than they are now, at less than half a billion pesos a day, 10, 000 pesos could go far and earn an average of 20-25 percent in a few weeks. With the present thin volumes in the stock market, investors would be lucky to make a five-percent profit. |
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INVESTMENTS (STOCKS)
ONLINE BROKERAGE Accord Capital Equities Corporation
ONLINE BANK
ONLINE NEWS
LINKS Tutorial |
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Type of Stocks |
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Common stockholders, however, have the last claim on dividends and are the last to collect in case of corporate liquidation. Common shares are available in Class A and B shares. "A" shares are those available to local investors only, while "B" shares are those available to both locals and foreigners. Investors can also buy preferred shares from the stock market. Preferred shareholders get the first crack at dividends before they are paid to common shareholders. Preferred shares, however, have no voting rights. Investors can also take a look at warrants or a security that gives the holder the right to buy or sell a number of shares at a specific price in a given period of time. Usually warrants are priced at a discount to their underlying share. The PSE also trades bonds in denominations of 5,000 pesos. |
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What types of stocks can one buy or sell? |
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Buy and Sell |
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How does one buy and sell from the market? Choosing one's broker is just like the concept of "suki" in the wet market. You go to a vendor that gives you the best price for a product and gives you good rates at good service. There is no hard and fast rule on this game. Most brokers compete on the commission rates, which the PSE says could be as high as 1.5 percent of the transaction. Brokers also compete on the quality of service such as offering research on companies, revenue forecast, latest developments and price analysis. Some brokers advise clients on the likely movement of a share price through sophisticated and technical methods. With the growth of technology, brokerage services now are even offered online. One can buy and sell stocks using the Internet through what is a growing trend of online stockbrokers. Filipinos or foreigners living overseas interested in investing in the Philippine stock market could open an account with these brokers. Rodney Lim, a trader and investor in the stock market for more than 10 years, says brokerages send account opening forms to overseas clients, along with instructions on how to remit cash deposits. Confirmations can be done by e-mail. Lim said brokerage firms are strict nowadays when it comes to overseas accounts as these accounts often fail to include their applications with a cash deposit, causing brokerage houses to take a hit. The PSE lists seven brokers licensed to trade stocks online: AB Capital Securities, Inc., Asian Capital Equities, Inc., BPI Securities Corp., Diversified Securities, Inc., F. Yap Securities, Inc., PNB Securities, Inc. and RCBC Securities, Inc. |
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Get Ready |
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How to get ready Be careful of rumors, though. The risk is high. If you want to buy on a rumor, you'd better be prepared for the consequences. If it turns out to be false information, this could wear down the price of the stock. "Don't choose soaring stock prices. If you know how to read charts, avoid overbought issues (shares which have a large chance of going down). You can bottom fish (buy at low prices) but near support levels (considered low priced but steady level)," says Cheng. A good preparation is to ask experienced investors to learn more about investing. Hang out with other investors at the trading gallery and swap information. And don't be afraid to wait for a good price. Do your own research to feel confident about where you would put your money next. Keep abreast of the news that may affect your stock. "You can be a millionaire. It is advisable you take a vacation after that," says Cheng. |
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Reference-INQ7.net |
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Market Volume |
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Volumes or the amount of shares bought and sold in the market are considered its lifeblood. When volume or participation in the market improves, investors can more easily buy into or sell out of a particular stock for possible profits. This means doors are open for entry and exit. "When the market is volatile, the chances of prices to go up are bigger," Cheng says. "If you're a beginner I would advise you try the small amounts (in the board lot) or try the blue chips," he adds. A blue chip is a stock that has a track record of steady profitability and dividend payments. It is normally less risky than others. Dividends are the portions of a corporation's after-tax earnings that are distributed to stockholders either in the form of shares or cash. |
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The significance of market volume |
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What does that mean for the average Juan? If he has the interest and the buying power, Juan can buy stocks, which gives him a share of |
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AB CAPITAL SECURITIES, INC. |
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ACCORD CAPITAL EQUITIES CORPORATION |
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BPI SECURITIES CORPORATION |
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CITISECONLINE.COM., INC. |
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F. YAP SECURITIES, INC. |
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RCBC SECURITIES, INC. |
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WEALTH SECURITIES, INC. |
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PHILIPPINE Online Brokers |
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