Pandemic seen to boost retail investor numbers with online trading shift

MANILA, Philippines — A surge in number of online accounts boosted the growth of stock market accounts in the local bourse last year, a clear sign of investors' shift on trading format that likely gained further traction this year due to the coronavirus pandemic.

There are 1.2 million accounts in the Philippine Stock Exchange Inc. last year, up 12.7% from 1.1 million accounts recorded in 2018, according to the PSE's annual Stock Market Investor Profile (SMIP) report released Wednesday.

The PSE said 63.7% of total stock market accounts in 2019 were online accounts, which grew 25% to 782,118. The remaining 36.3% were investor accounts with traditional brokerage firms. 

In a statement, Ramon Monzon, PSE president and chief executive, said more investors will likely open online accounts this year amid movement restrictions due to the pandemic.

"Online accounts have been the reason for the steady rise in total stock market accounts in the last 10 years. The shift in trading format preference of investors have encouraged stock brokerage companies that cater to retail investors to start offering online trading services to their clients,” Monzon said.

"While the data we have now is from 2019, we expect the online investor population to increase in 2020 mainly due to investors opening online accounts during the community quarantine period and as investors participate in initial public offerings through PSE EASy (Electronic Allocation System),” he added.

Since the enhanced community quarantine (ECQ) was enforced in Luzon last March, trading at the local bourse had been shortened to four hours from the original seven hours. The shortened trading has remained in effect even after lockdown measures were eased last June 1.

That said, at a time stringent quarantine protocols were in place under ECQ, PSE implemented a full off-site trading, and it was only last June 1 when the warm bodies in the trading floor was welcomed back under strict physical distancing measures.

In the same yearly report, the PSE said retail investors owned 97.7% of total stock market accounts in 2019 while the rest were institutional investors. Last year, retail accounts grew 12.9% while institutional accounts increased at a slower rate of 6.4%.

Investor profile

By nationality, 98.4% of total stock market accounts belong to local investors. The report also said investors earning less than P500,000 each year had the biggest share in total accounts at 59.4%, albeit lower compared to its 62.4% share a year ago. This, after the proportion of account owners earning P1 million annually increased to 21.5% from 16.6% previously.

Meanwhile, the gap between the number of male and female investors slightly narrowed last year. Men owned 50.2% of total retail accounts, while women cornered 49.8%, up from 48.4% in 2018. In terms of location, most investors were based in Metro Manila.

"We hope to see an increase in investors based in the provinces and overseas in the coming months especially as more online stock brokerage firms validate client applications through videoconferencing platforms, eliminating the need for a face to face KYC (Know Your Customer) procedure,” Monzon explained.

"With the stock market still trading way below pre-COVID levels, we may see new investors who are looking for good buying opportunities open trading accounts. This may also help prop up our investor count for the year,” he added.