Investing in the Philippine stock market has never been simpler and more accessible today, thanks to the Internet and online stockbrokers or trading participants. These days, you no longer have to spend hours calling human brokers to help you transact your buy and sell orders for stocks. With just a click of a mouse or a tap on your smartphone, you can now easily execute your trade.

It’s been almost a hundred years since the Philippine stock market was founded as the Manila Stock Exchange (MSE) before finally merging with the Makati Stock Exchange (MkSE) to form the present-day Philippine Stock Exchange (PSE); unfortunately, only a fraction of Filipinos (~2%) are presently invested in the local bourse.

So, if you want to learn how to start investing in the Philippine Stock Exchange any time soon, here are some facts and a step-by-step guide to help you in your journey.

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What is the stock market?

The stock market, also known as the stock exchange, is where people and institutions buy and sell shares of companies (also known as stocks), making them part-owners of the company. In the Philippines, we have the Philippine Stock Exchange (PSE). 

Quick facts about the Philippine Stock Exchange (PSE)

  • There are currently more than 270+ actively listed companies on the Philippine Stock Exchange, including some of the country’s most popular and biggest companies.
  • The Philippine Stock Exchange Index (PSEi) is PSE’s main index, composed of 30 of the largest companies in the country, which provides the overall market condition of the local stock market. 
  • Some PSEi companies include Jollibee Food Corporation (JFC), Ayala Corporation (AC), SM Investment Group (SM), BDO, BPI, Metrobank (MBT), PLDT (TEL), Globe Telecoms (GLO), San Miguel Corporation (SMC), Meralco (MER), and many more.
  • There are two common ways of earning money through the stock market: (1) through capital or price appreciation (buying when the stock price is low and selling when it’s high) and (2) earning dividends (please note that not all stocks pay out dividends).
  • The trading hours of the PSE are from Mondays to Fridays (except holidays), 9:30 AM to 3:30 PM (with a one-hour break from 12 NN to 1 PM).
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How to start investing in the PH stock market online

Here are simple steps to start investing in the Philippine Stock Market:

Step 0: Learn the basics of the stock market

Everything is difficult when you’re just starting, but it eventually becomes easier as you go. Likewise, before you even open a trading account, you must first understand the basics and the ins and outs of the stock market.

You should also know the following:

  1. Your risk appetite – how much money are you willing to risk while still allowing you to get a good night’s sleep?
  2. Your time horizon – how long do you intend to stay invested in the stock market? 
  3. Your investment capital – how much are you willing to invest in the stock market?

You should also check these topics:

  1. Risks of investing in the stock market and how to minimize them.
  2. The board lot table to identify the minimum number of shares you can buy and sell per price range.
  3. How to diversify your investment portfolio.
  4. The trading and transaction fees when buying and selling.

Once you get to know the basics of the stock market, you can now proceed to Step 1.

Step 1: Choose your stockbroker or trading platform

In order to buy and sell shares in the stock market, you must first have a stock brokerage account. They are companies or individuals who are accredited by the Philippine Stock Exchange (PSE) and the Securities and Exchange Commission (SEC) to place orders on your behalf.

Since you’re a stock market beginner with a small trading capital, you should start with an online stockbroker. Here are some of the accredited stockbrokers and their minimum balance required from the PSE website:

  • AAA Equities (min. Php10,000)
  • BDO Securities (no minimum balance, but you must have a BDO online account)
  • BPI Trade (no minimum balance, but you must have a BPI online account)
  • COL Financial (min. Php1,000)
  • DragonFi (min. Php1,000)
  • First Metro Sec (min. P1hp,000)
  • PhilStocks (min. Php5,000)

Besides allowing you to trade stocks, your online stockbroker can also provide access to their stock reports and research, real-time price information, access to Initial Public Offering (IPO), and more.

Check out our list of the beginner-friendly online stockbrokers here.

Step 2: Open a trading account with your chosen stockbroker

Once you have chosen a stockbroker, you will open a trading account with them. You will also provide the necessary information and additional requirements as instructed:

  • Filled-out account information
  • Valid government-issued ID
  • Tax Identification Number (TIN) 
  • Valid Email Address and Phone Number
  • Some brokers also require selfie verification, proof of billing, and specimen signature.

Upon sending the necessary requirements, you will wait for your trading account’s approval. Some brokers will take one to three days before they will confirm your account, while some will only need a few minutes.

Step 3: Fund your trading account.

Upon opening your trading account, you will also need to deposit the required minimum amount of your chosen stockbroker before you can start your trading journey. Most online brokers accept bank transfers, over-the-counter transactions, or online bill payments.

While you can open your trading account with as little as Php1,000, it’s recommended to add more funds to limit your initial losses from trading fees and commissions when buying (and selling) stocks.

Depending on your broker, your transferred fund may be available within a few minutes or the next banking day. 

Step 4: Make a plan and research which company to buy

Before you buy your first stocks, you must first do your due diligence, research, and plan accordingly because not every stock is created equal. Depending on your time horizon, you may buy and hold a stock for a day, a week, a month, or even years.

However, for newbies in the stock market, the most common investing strategies are the following:

  • Peso-Cost Averaging (PCA) – this is the most common strategy for beginners, wherein you’ll buy good stocks (usually PSEi companies) regularly regardless of their price to ride through the ups and downs of the market over a long period of time.
  • Dividend Investing – this strategy is best for those looking for a regular income from stocks that pay dividends, some quarterly, bi-annually, and annually. Please note that not all stocks pay dividends. However, there are companies that pay 5 to 10% of annual dividends.
  • Position Trading – this strategy is more advanced than the first two. However, it provides the best potential profit. First, you need to learn the basics of technical analysis and identify up-trending stocks, which you’ll buy and hold until the trend goes down ways (downtrend).
  • Read Broker Recommendations – aside from facilitating your trades, your chosen broker also usually releases a list of their recommended stocks for you to choose from. They may also consist of their rationale for choosing the stocks and the potential upside. However, it’s important to remember that while recommendations make your life easier, it’s still crucial to do your own research.

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Step 5: How to buy or sell a stock

Depending on which stockbroker you use, there may be slight differences in how you buy or sell stocks. However, these are the basic steps:

  1. Input the Stock Code (Ticker Symbol) of the stock you’re willing to buy or sell.
    • For example, Ayala Corporation’s ticker symbol is AC, and Jollibee Food Corporation’s is JFC. Don’t worry; you don’t need to memorize them; your broker will have a list of the stocks.
  2. Input the price you’re willing to buy or sell.
    • When choosing the price, you can put your desired price to buy (or sell), or you can match it with the current price shown on your online broker account.
  3. Input the number of shares you want to buy or sell.
    • The number of shares you’ll be allowed to buy will depend on the board lot table, showing the minimum number of shares you need to buy per price. 
    • For instance, stocks that cost P5 to P9.99 have a board lot of 100, while stocks from 50 to 99.95 have a board lot of 10. So, ensure that you have enough cash for a successful transaction.
    • When choosing the number of shares to buy or sell, you must also consider the fees and commissions you’ll pay.
  4. Wait for the trade to execute.
    • Before you can buy or sell a stock, there must be someone on the other end of the transaction who will accept your proposal.
    • For example, if you want to buy 20 shares of JFC for Php200 per share (or ~Php4,000), there must be someone selling the same. 
    • On the other hand, if you want to sell 20 shares of JFC at Php250 per share, there should be someone willing to buy them at that price.
    • You may also input the price and number of shares that have already been posted for immediate transactions.

Step 6: How to diversify your trading portfolio

Once you finish buying your first stock, you must also learn how to diversify your portfolio. By diversifying your portfolio, you can spread your risk and reduce your exposure when a stock suddenly goes down, especially if it’s affected by sudden changes in the macro level.

Here are some ways you can diversify:

  1. By buying stocks from different sectors.
    • Buying stocks from various sectors, like banking, services, conglomerates, property, energy, and more, helps spread your risk. It will also help to avoid buying multiple stocks coming from the same sectors. 
    • For instance, buying BDO, MBI, Metrobank, Chinabank, and Security Bank is not a good strategy because you’re concentrated in the banking sector, and one bad news affecting the industry will pull all your stocks down.
  2. By buying different asset classes aside from stocks.
    • Aside from buying stocks, you may also buy other asset classes like mutual funds and bonds.

The Philippine Stock Exchange (PSE) remains underutilized by many Filipinos because of the lack of knowledge about it, despite having the opportunities to access it. It also offers a way to help people invest in their future and be part-owners of Filipino companies.

Have you tried investing in the Philippine stock market? Please share your experiences with us in the comments below.

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