Loan Mower

Philippine Stock Exchange (PSE) requested the state-run social insurance programs, the Government Service Insurance System (GSIS) and the Social Security System (SSS), to restart the defunct Stock Investment Loan Program (SILP), in an effort to enhance brand status, strengthen capital market, elevate public accountability, improve corporate governance, increase operational transparency, broaden retail ownership participation and reduce institutional ownership concentration. Members and pensioners who availed themselves of the SILP can repay their loans through the sale of stocks, cash payment before maturity and deduction from any benefit due to the members and pensioners following separation or retirement from the service or death. After its maiden offering that preceded the 1997 Asian financial crisis, SILP became unprofitable because the stocks that the GSIS and SSS funded were deemed unrecoverable which persuaded them to embark on a condonation program to unload nonperforming loans. Members and pensioners were able to settle their SILP obligations at a 100% condonation on penalties and surcharges and a 50% condonation on interest. While the onset of the said financial crisis was one of the reasons that caused the regional stock market meltdown and eventual severe bear market, we cannot deny the fact that most members and pensioners who participated in the SILP did not have the necessary financial education to invest in stocks. They jumped on the bull market bandwagon that began in 1990 unaware of the high risk-high reward proposition of stock market investing. What started as multifold gains during the bull run years, ended as multifold losses during the bear hug years. Although we commend the PSE for developing and implementing programs to increase the stock trading accounts and participation of the members and pensioners, it would be in the best interest of the latter to complete and pass a PSE-sanctioned financial education course focused on stock market investing before being made eligible for SILP. This may not be enough to minimize the potential losses that members and pensioners can endure but at least it can educate them about the risks associated with stock market investing. It is worth mentioning that the phrase past performance is not indicative of future results and is a standard disclaimer in investment materials required by the Securities and Exchange Commission (SEC). The purpose of which is to prevent investors from assuming that historical returns guarantee future gains protecting their investments from unrealistic expectations when evaluating stocks and other related financial assets.

Roster Booster

Although the Securities Exchange Commission (SEC) and the Philippine Stock Exchange (PSE) have gone a long way in developing and improving the capital market, the Philippines remain at a state of stagnation in terms of stock trading activity. We have argued that what kept the PSE dead last in terms of stock trading activity is the meager investor participation brought about by the limited number of listed companies. The Association of Southeast Asian Nations (ASEAN) stock exchanges is led by Malaysia with 1,056, Indonesia with 956, Thailand with 857, Vietnam with 699, Singapore with 612 and the Philippines with 284. While the policymakers can lower the requirements for companies applying for listing by way of an initial public offering, introduction or backdoor to minimize if not eliminate unnecessary regulatory procedures that create compliance costs, it would take a considerable amount of time before we can persuade companies to go public and encourage investors to take part in stock trading. If the policymakers want to increase the number of listed companies at the shortest possible time then they can take advantage of the sovereign guarantee of the government by listing the qualified Government-owned or Controlled Corporations (GOCC). A sovereign guarantee is a legal commitment by a government to cover specific financial obligations if a borrower defaults while a GOCC is a corporation chartered by special law or if organized under the general corporation law is owned or controlled by the government. Most GOCC are subsidized by the government to cover operational expenses while the rest have enough revenues to remit dividends to the government. Under Republic Act 7656 or the Dividends Law, GOCC must declare and remit at least 50% of their annual net income to the government. As of 30 September 2025, there are 218 GOCC in which 53 are dividend-paying while 165 are government-subsidized. Since these dividend-paying GOCC are considered qualified companies to apply for listing by way of an initial public offering, introduction or backdoor then it would be reasonable for the government to do so. Making a GOCC a public corporation owned by the general population rather than by the government alone can enhance brand status, strengthen capital market, elevate public accountability, improve corporate governance, increase operational transparency, broaden retail ownership participation and reduce institutional ownership concentration. This can be a public private partnership undertaking wherein the public sector through the government and the private sector through the stakeholders can work together to make the dividend-paying GOCC genuine public companies and welcome addition to the roster of listed companies.

Dead Last

For the first time since the Philippine Stock Exchange (PSE) was established in 1927, the stock trading accounts held by retail and institutional investors breached the 2-million mark. Stock trading accounts increased by 49.7% from 1.91 million in 2023 to 2.86 million in 2024 due to the implementation of technology-based stock trading platforms such as the PSE EASy that makes it seamless to participate in initial public offerings, the PSE EQUIP that provides public access to real time stock market data and the GStocks app that allows investors to trade stocks through mobile devices. The value of stock trading activity refers to the total dollar amount of stocks bought and sold on an exchange during a given month. It is an important indicator of favorable investor interest, increased market liquidity, enhanced stock tradability and expanded market participation among investors. The value of stock trading activity often reflects how stocks can be bought or sold without causing large stock price movements that can broaden the valuation gap between the market value of a company and the intrinsic value of a stock. But quantity does not equate to quality because despite the notable increase in stock trading accounts, the PSE remains as the worst performing stock market among the Association of Southeast Asian Nations (ASEAN) member countries. The value of stock trading activity across the ASEAN stock exchanges is led by the Stock Exchange of Thailand (SET) at $25.2 billion, Singapore Exchange Limited (SGX) at $21.0 billion, Vietnam Stock Exchange (VNX) at $17.9 billion, Indonesia Stock Exchange (IDX) at $15.3 billion, Bursa Malaysia Berhad (KLSE) at $12.1 billion and the Philippine Stock Exchange (PSE) at $3.0 billion. PSE has gone a long way in developing capital markets, ensuring shareholder protection, promoting corporate governance and increasing investor confidence. What kept the PSE dead last in terms of stock trading activity is the meager investor participation brought about by the limited number of listed companies. The ASEAN stock exchanges is led by Malaysia with 1,056, Indonesia with 956, Thailand with 857, Vietnam with 699, Singapore with 612 and the Philippines with 284. Perhaps the policymakers must lower the requirements for companies applying for listing by way of an initial public offering, introduction or backdoor to minimize if not eliminate unnecessary regulatory procedures that create compliance costs. The ease of doing business can persuade companies to go public and encourage investors to take part in stock trading. Philippines is down but not out so buy now at the low and sell later at the high.

Basura Stocks

Once the securities of a company is listed in an organized exchange such as the Philippine Stock Exchange (PSE), a listed company must conform with the listing and disclosure rules. Otherwise, the securities can be suspended or delisted if and when the PSE determines that the listed company failed to comply with the listing agreement. There are numerous conditions for delisting the securities of a listed company and the most prominent of which are the frequent failure to submit the structured reportorial requirements in accordance with the listing and disclosure rules, repeated failure to make the adequate and accurate disclosures, and the issuance of erroneous and deficient financial statements. Based on its latest press release, the PSE stated that the following securities of listed companies are suspended from trading for failure to submit an annual report for the year ended 31 December 2024 in violation of the structured reportorial requirements in accordance with the listing and disclosure rules. These are Abra Mining & Industrial Corporation (AR) suspended since 2021, Cyber Bay Corporation (CYBR) suspended since 2021, Globalport 900 Inc (PORT) suspended since 2014, IP E-Game Ventures Inc (EG) suspended since 2017, Manila Jockey Club Inc (MJC) suspended since 2023, MJC Investments Corporation (MJIC) suspended since 2023, Philab Holdings Corporation (DNA) suspended since 2018, Philippine National Construction Corporation (PNC) suspended since 2008 and Phoenix Petroleum Philippines Inc (PNX) suspended since 2024. The suspension from trading of the securities of these listed companies is for violating a basic listing and disclosure rule which is the submission of an annual report within the prescribed period of 105 days after the end of the fiscal year. Please note that after the lapse of the 3-month suspension period and the listed company remains non-compliant, the PSE must initiate delisting procedures. We do understand why the securities of these listed companies has been suspended but what we do not understand is why the uninitiated delisting procedures. The suspended securities of these listed companies have breached the 3-month suspension period threshold and should have been delisted and removed from the PSE official registry. Based on the listing and disclosure rules published as of January 2025, there is no clause which states that the PSE has a discretion not to initiate delisting procedures on a non-compliant listed company. It is worth mentioning that these listed companies in which securities were suspended from trading are either money-losing, non-operating or both. We can consider them as basura stocks and must be thrown to the garbage bin.