Stock Market Outlook

M 24
May
24, 2013

Philamongtopstockperformersytd
Philippinesisthe8th bestperformingmarketytd aroundthe
world,up27%inUSDterms.

Leaders ytd
Leadersytd
Rank

Stock

%gain

Sector

TransAsia

+134.5%

Power&energy

AllianceGlobal

+62.3%

Holding Firm

URC

+53.8%

Consumer

Petron

+53.0%

Power &energy

EEI

+52 5%
+52.5%

Construction

MERALCO

+51.2%

Power&energy

Megaworld

+46.9%

Property

GlobeTelecom

+46.4%

Telecommunications

Filinvest Land

+46.3%

Property

10

SMDC

+45.2%

Laggards ytd
Laggardsytd
Rank

Stock

%gain
g

Sector

PepsiCola

5.8%

Consumer

Philex Mining

5.2%

Mining

EDC

5.0%
5 0%

Power & energy

Power&energy

Bloomberry

4.3%

Gaming

Aboitiz Power

+0.4%

Power&energy

Atlas Mining

+2.6%

Mining

First Gen

+7.2%

Power&energy

g
DMCIHoldings

+7.4%

HoldingFirm
g

Aboitiz Equity

+7.6%

10

BPI

+10.9%

Banking

Marketoutlook:Valuation
PerformanceandValuationofSelectedMarkets
((Source:Bloomberg,RSEC)
g
)
ytd
%change
(US$ terms)

2013PE
(x)

MedianPE
(since 2001)

PSEi

+27%

19 6*
19.6*

14 8
14.8

New York(DJIA)

+17%

13.9

17.0

Paris (CAC40)

+9%

12.6

13.5

Frankfurt (DAX30)

+9%

12.4

15.4

London (FTSE100)

+7%

12.5

16.9

Tokyo (Nikkei225)

+27%

22,0

38.4

Hong Kong(HangSeng)

+2%

11.1

14.5

Jakarta (JCI)

+19%

17.0

16.6

Thailand SET

+21%

15.1

12.9

*RSECestimates.OtherindexesbasedonBloombergdata.

Phils2013PEis
aalreadyabove
eady abo e
itshistorical
median.
However, the
However,the
marketisnot
yetatitspeak
of 25x PE set in
of25xPEsetin
2003.

Marketoutlook:Valuation
Markettradesat19.6x2013earnings,alreadyabovethehistorical
median(14.8x).
(
)
However,sincethehistoricalmedianisanaveragemeasure,it
meansthatthemarkethastradedabovethislevelhalfofthetime
in the past and therefore can still trade above this level going
inthepastand,therefore,canstilltradeabovethislevelgoing
forward.Marketstartedtotradeaboveaverageonlysinceearly
2012.
Technically,themarketistrendingupandweadvisetoridethis
T h i ll h
k i
di
d
d i
id hi
trenduntiltechnicalanalysisconfirmsareversalofthetrend.
Uptowhatlevel?
Historically,themarkethastradedatahistoricalhighPEof25x
in2003andcouldmovebacktowardsthishighbeforereversing.
BasedonourtargetpricesforthePSEi
Based on our target prices for the PSEi stocks,weexpectthe
stocks we expect the
PSEi tohit7,800thisyear.
6

Marketoutlook:Valuation
HighPEof35xin2001,
althoughmarketonly
toucheditbriefly

25xPe ismoresignificant
highsincemkt stayedhere
foralmostayear
y

Marketstartedto
tradeabove15x

HistoricalPhilippinemarketPEs

Marketoutlook:Factors
Continuedmarketrunupmaybejustifiedby:

Economicindicatorshavebeenimprovingacrosstheboard
d
h
b
h b d GDP,
unemploymentof6.8%belowhistoricalaverageof9.1%since1994,
budgetdeficit,FXreserves
FitchandS&PhaveupgradedthePhl
h d & h
d d h hl toinvestmentgradethisyear,
d h
Moodysexpectedtofollow;
Financialmarketliquidity;
Furthergrowthinmostcorporateearnings 16%eps growth,from
18%in2012,withhighlikelihoodofanupgrade.

Marketoutlook:Economy
Mosteconomicindicatorsin2012betterthanforecast.2013indicators
expectedtobegenerallybetter.
2011A

2012A

2012F

RealGDPgrowth(%)

3.7

6.6

562

Inflation(%)

4.8

3.1(fullyear)

3 52

BSPovernight
borrowing 1

4.5

3.5

BSPovernightlending1

6.5

AveragePesodollar
A
P
d ll
rate1

2012actualvs target

2013F

Highendofthetarget

672

Lowendoftarget

352

3.5

Ontrack

3.25

5.5

5.5

Ontrack

5.25

43 31
43.31

42 23
42.23

42 96
42.96

St
Strongerthanforecast
th f
t

40 50
40.50

BudgetSurplus
(Deficit),Phpbn 2

(198)

(235.3)

(279.0)

Betterthantarget

(241.0)

Budgetsurplus
(Deficit)/GDP(%)2

(2.0)

(2.2)

(2.6)

Betterthantarget

(2.0)

1RCBCSecuritiesestimate
2Source:Officialgovernmentforecasts.

Marketoutlook:Economy
Mosteconomicindicatorsin2012betterthanforecast.2013indicators
expectedtobegenerallybetter.
2011A

2012A

2012F

2012actualvs target

2013F

OFWremittances,$bn 2

20.1

21.4

21.2

Betterthantarget

22.8

Exports,$bn 1

48.0

52.0

52.7

Belowtarget

57.0

BOPSurplus(Deficit),$bn 2

10.2

8.9

2.8

Betterthantarget

3.0

GrossInternational
Reserves, $bn 1
Reserves,$bn

75.3

84.2

78.1

Betterthantarget

86.0

1RCBCSecuritiesestimate
2Source:Officialgovernmentforecasts.

10

Marketoutlook:Economy
GDPgrowingaboveitshistoricalaverageof5%.
Low 2012 inflation of 3 1% gives the BSP elbow room to cut
Low2012inflationof3.1%givestheBSPelbowroomtocut
interestratesfurthertofightanylingeringglobaleconomic
weakness.
Lowbudgetdeficitgivesgovernmentroomtopursuefiscal
expansionmeasures.
RecordhighGIRof$84bnasofend2012providesammunition
g
$
p
towardoffcurrencyattacks.

11

Marketoutlook:Factors
GDPgrowthhasbeenaccelerating
19962000

20012005

20062010

20112012

3.6%

4.6%

5.0%

5.25%

Average GDPgrowth

AnnualrealGDPgrowth,2001 2012
((%)
)
9
8
7
6
5
4
3
2
1
0
1
2

7.6
67
6.7
5.8

5.2

4.4
31
3.1

2.9

3.6

66
6.6
4.8

66
6.6

5.2
4.2

3.9

1.1
1996 1997 19980.6
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
12

Market outlook: Factors

Marketoutlook:Factors
National Budget Deficit 2001-2012
2001 2012 (Phpmn)
350,000
300,000
250 000
250,000

298,532

5.0%
3.8%
3
8%
210,741

235,300

3 7%
3.7%

3.7%

197,754

200,000

2.2%

2.6%

150,000

0.2%
12,441
68,117
64,791

2002

2003

2004

2005

2006

Budget Deficit

2007

2008

4%
3%
2%

146,778

50,000
2001

0.9%

1.0%
0%

199,868
100,000 147,023

5%

3.5%

4.4%

187,057

6%

314,458

2009

2.0%

1%
0%

2010

2011

2012

% to GDP

13

Market outlook: Factors

Marketoutlook:Factors
GrossInternationalReserves(20012012)
90

84.20
75.30

80
70
I nbn$

60

62.37

CAGRof16.5%

50

44.24

40

33.75

30
20

18.49
15.69 16.36 17.06 16.23

37 55
37.55

22.97

10

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

14

Marketoutlook:Economy
Phl upgradedtoinvestmentgradefor1st timeinhistory
FitchandS&Praisedthecountryssovereigncreditratingto
investmentgradeearlythisyear.
Upgradescitedcountryslowfiscaldeficitandstrongforeign
pg
y
g
g
exchangereservesposition.

15

Marketoutlook:
Liquiditywillencourageriskseeking
i idi
ill
ik
ki
SDAsamountedtoPhp1.86trillionor$46bnasofFebruary2013.
Thisis20%ofthestockmarketscapitalization.Thegrossrateon
SDAs has been cut to 2%, making stock investing more enticing. BSP
SDAshasbeencutto2%,makingstockinvestingmoreenticing.BSP
saidthiscouldbebroughtdowntoaslowas1%.
BSPisalsorestrictinginvestmentinSDAsbyforeignersandbanks,
excluding UITFs of their trust departments
excludingUITFsoftheirtrustdepartments.
Lowyieldsonfixedincomeinvestmentswouldalsoincreasethe
incentiveforinvestorstoseekhigherreturnhigherriskinvestment
vehicles.

16

Marketoutlook:
Liquiditywillencourageriskseeking
Localparticipationinthestockmarket
Local
participation in the stock market hasimprovedsincethelowin
has improved since the low in
2003
LocalParticipationinthePSE20032012
80.0%
67.6%

70.0%

62.2%

60.0%
50.0%

49.1%

51 3%
51.3%

39.4%

40.0%

51.2%

61.9%

55 1%
55.1%

45.0%
45.3%

30.0%
20 0%
20.0%
10.0%
0.0%
2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

17

Marketoutlook:
Market
outlook:
Liquiditywillencourageriskseeking
TrustassetshavegrownataCAGR of18%since2002.
Trust Assets (20022012,
TrustAssets(2002
2012,Phpbn)
Phpbn)
Php3,200

Php3,500

Php2,800

Php3,000

Php2,217
p ,

Php2,500

Php1,790

Php2,000

Php1,234
Php893

Php1,500
Php1,000

Ph 813
Php813
Php707
Php597

Php1,177

Php872

Php500
Php0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
18

Marketoutlook:forecasted2013
eps growthat16%
h 16%
Thisyear,weforecastaggregategrowthinearningspershareof
16%,slightlybelowlastyears18%,butchancesofearnings
upgradesarehigh.
d
hi h
1Qcoreaggregateearningsofcompanieswefollowup23%.

19

Risk factors
Riskfactors
Marketsuptrendmaybederailedby:
Strongpeso,whichcouldharmBPOindustry.However,the
centralbankcanmoderatethepesosappreciation.
WeaknessinEurozoneandtheUS.
Weakness in Euro zone and the US
USrecovery,whichcouldbringbackfundsintotheUSstock
market.
Ingeneral,anydisappointmentvs expectationscouldtrigger
selloff.

20

Market Outlook: Conclusion

MarketOutlook:Conclusion
Eventhoughthemarketisalreadytradingaboveitshistorical
average,itmaystilltrekuptowardsitshistorichighof25x.
Considering
Consideringourtargetpricesforthecompaniesthatwecover,we
our target prices for the companies that we cover we
expectanupsideof7.5%byyearendtoaPSEi levelof7800.At
thislevel,marketPEwouldbeat21x2013earnings.Thatsaid,a
numberofstockshaveahigherupside.
b
f t k h
hi h
id
Stockvaluation,targetprices&
expectedreturn
d

21

Market Outlook: Conclusion

MarketOutlook:Conclusion

Wewillbewatchfulofsignsofamarketreversalandwill
recommend an exit accordingly
recommendanexitaccordingly.

22

Basicsofstockinvesting
Basics
of stock investing
Basics of stock investing

23

Philippine Stock Exchange

PhilippineStockExchange
ThefirststockexchangeinSoutheastAsia,openingin1927.
344listedcompanieswithamarketcapitalizationofroughly
$250bn.
$250bn
ThePSEservesasthesecondarymarketforequity,quasi
equityandequitylinkedsecuritiesinthePhilippines.

24

Philippine Stock Exchange

PhilippineStockExchange
Asecondarymarketiswhereoutstandingequitysecuritiesare
tradedamongexistingholders.
Differsfromtheprimarymarketwhichreferstothesaleofnew
securities i e IPOs followon
securities,i.e.,IPOs,follow
onoffers&privateplacements.
offers & private placements

25

Philippine Stock Exchange

PhilippineStockExchange
Itprovidesliquidityforsecuritiessoldintheprimarymarketand
determinesprevailingmarketpricesoflistedcompanies.

26

Philippine Stock Exchange

PhilippineStockExchange
FinancialinstrumentsavailableatthePhilippineStock
Exchange:
Commonstocks
Preferredstocks
Warrants
PhilippineDepositaryReceipts(PDRs)
Soon:ExchangeTradedFunds(ETFs)

27

Philippine Stock Exchange

PhilippineStockExchange
Themarketsperformanceisusuallyrepresentedbythe
PhilippineStockExchangeIndexorthePSEi.
Forexample,ifasofDec.28,2012,thePSEi was5,812.73
andasofMay20,2013,itwas7,275.38,thenitmaybesaid
thatthePhil.stockmarketwasup25%overtheperiodDec.
28,2012 May20,2013.

28

Philippine Stock Exchange

PhilippineStockExchange
ThePSEi overtimemayalsobeplottedonagraphtohavea
visualofmarketperformance.
Market
Markettrendedup
trended up
sincebeginningof
2013andhas
formedaneven
steeperuptrend
sincelateMarch.

29

Philippine Stock Exchange

PhilippineStockExchange
3896.74

1,684.75

7,275.38
The
TheweeklyPSEi
weekly PSEi fell
fell
57%fromOct2007
toOct2008andhas
sincerisen332%as
ofMay20,2013.

30

PhilippineStockExchangeindexcomponents
May21,2013

Stock

Freefloat
marketcap(Pmn)

%Weightinthe
Index

AyalaCorp.

152,642

5.32

Aboitiz EquityVentures

135,573

4.72

AllianceGlobal

107,833

3.76

A l L d
AyalaLand

243 006
243,006

8 47
8.47

Aboitiz Power

53,791

1.87

BDOUnibank

146,202

5.09

Belle Corp
BelleCorp.

29 921
29,921

1 04
1.04

Bloomberry Resorts

39,248

1.37

176,843

6.16

43,348
,

1.51

BankofthePhilippineIslands
DMCIHoldings
g

31

PhilippineStockExchangeindexcomponents
May21,2013

Stock

Freefloat
marketcap(Pmn)

%Weightinthe
Index

EnergyDevelopmentCorp.

59.906

2.09

FirstGenCorp.

25,640

0.89

GlobeTelecommunications

45,821

1.60

I t
InternationalContainerTerminal
ti
lC t i
T
i l

92 344
92,344

3 22
3.22

JollibeeFoods

57,959

2.02

JGSummitHoldings

103,644

3.61

Metropolitan Bank & Trust Co

MetropolitanBank&TrustCo.

141 220
141,220

4 92
4.92

Megaworld Corp.

39,661

1.38

ManilaElectricCompany

56,470

1.97

MetroPacificInvestments

65,600

2.29

32

PhilippineStockExchangeindexcomponents
May21,2013

Stock

Freefloat
marketcap(Pmn)

%Weightinthe
Index

ManilaWater

53,416

1.86

PetronCorp.

25.118

0.88

Philex Mining

21,943

0.76

RobinsonsLand

38,638

1.35

Semirara Mining

27,531

0.96

SMInvestments

290,555

10.12

S Mi l C
SanMiguelCorp.

40 442
40,442

1 41
1.41

SMPrimeHoldings

105,284

3.67

Phil.LongDistanceTelephone

341,800

11.91

Universal Robina Corp.

UniversalRobina
Corp

108 475
108,475

3 78
3.78

33

OtherPhilippineStockExchangeIndexes

Allshares
Financials
Industrialindex
HoldingFirms
Services
Property
Mining&Oil

34

PSEtraded
PSE
tradedsecurities
securities
Common
CommonStock
Stock
Entitlestheholdertoownershipinthecompany.Forpractical
purposes,thismeansthattheholderhasvotingrightsinthe
companyandenjoysaproportionateshareintheprofits
throughthereceiptofdividendpaymentsandaresidual
claimwhenthecompanyliquidates.
p y q
Residualclaimreferstotherecipt ofwhateverisleftofthe
companysassetsafterallotherstakeholders(creditors,
preferredshareholders,employees,suppliers,government)
f
d h h ld
l
li
)
havebeenpaiduponthecompanysliquidation.

35

PSEtraded
PSE
tradedsecurities
securities
Preferredstock
Holdersofpreferredstockhavepreferenceoverholdersof
commonstocksintermsofdividendsandclaimupon
liquidation.
liquidation
Holdersofpreferredstocksareentitledtoreceive
dividends,totheextentagreedupon,beforeanydividends
arepaidtotheholdersofcommonstocks.
However,preferredstocksusuallyhaveaspecifiedlimited
rate of return or dividend and liquidation is only based on
rateofreturnordividendandliquidationisonlybasedon
theparvalue.

36

PSEtraded
PSE
tradedsecurities
securities
Warrants
Acorporationcanalsoraiseadditionalcapitalbyissuing
warrants.
Awarrant,normallyissuedonadetachablebasis,allows
itsholderstheright,butnottheobligation,tobuynew
sharesofthecompanyatasetpriceduringaspecified
p y
p
g p
periodoftime.
Itisusuallyprovidedfreeofchargeandtradedseparately
i h
inthesecuritiesmarket.
ii
k

37

PSEtraded
PSE
tradedsecurities
securities
PhilippineDepositaryReceipt
pp
p
y
p
Issuedbyacompanyfacingforeignownershiprestriction,
suchasamediacompany,inordertoallowforeignersto
i
investinthecompany.APDRisanevidenceofownership
t i th
A PDR i
id
f
hi
ofaforeign/foreignbasedentityinaPhilippine
corporation.
Itisasecuritywhichgrantstheholdertherighttothe
deliveryorsaleoftheunderlyingshare,andtootherrights
associated with common stock ownership
associatedwithcommonstockownership.

38

PSEtraded
PSE
tradedsecurities
securities
ExchangeTradedFund
g
Aclosedendfundthatisinvestedinabasketofsecurities
tomimicanindexandtradedinthestockmarket.Inthe
Phili i
Philippines,forexample,itmaytrackthePSEi.
f
l it
t k th PSEi
Sinceitistraded,itspricewillreflectsupplyanddemand
forthesecurityandnottheunderlyingnetassetvalueof
y
y g
thefund.

39

Types of Orders
TypesofOrders
Tradinghoursarefrom9:30amto3:30pmwithabreakfrom
g
p
12:30 1:30pm.
Thesearethetypesofordersthatinvestorsmayplaceinthe
market:
k t
Marketorder
Limitorders
Limit orders
Dayorder
Goodtilcancelledorder
Shortsale
Stoplossorders
40

Types of Orders
TypesofOrders
Marketorder
anordertobuyorsellastockatthebestcurrentprice.For
abuyer,thiswouldbetheprevailingaskprice,whilefora
seller this would be the prevailing bid price
seller,thiswouldbetheprevailingbidprice.
Ensuresthattheorderwillbedone.
Theprevailingaskpriceisthelowestaskingpriceofsellers,
p
g
p
gp
,
whiletheprevailingbidpriceishighestpriceatwhich
buyersarewillingtobuy.
Atransactionoccurswhenthelowestaskmatchesthe
At
ti
h th l
t k t h th
highestbid.

41

TypesofOrders
Atransactionoccurswhenbidandaskpricesmatch.

42

Types of orders
Typesoforders
Howstockpricesarereported:
p
p
Open firsttransactedpriceofstockorfirstcomputedindex
fortheday
High highesttransactedstockpriceorhighestcomputed
indexfortheday
Low
Low lowesttransactedstockpriceorlowestcomputedindex
lowest transacted stock price or lowest computed index
fortheday
Close lasttransactedstockpriceofindexatendoftrading.

43

Types of Orders
TypesofOrders
Limitorder
anorderwhichspecifiesthebuyorsellprice.
Ordermaynotgetdoneifmarketpricedoesnthitthe
buyersbidpriceofthesellersaskprice.

44

Types of Orders
TypesofOrders
Dayorder
y
anorderwhichexpiresifnotdonewithinthedayitis
given.

45

Types of Orders
TypesofOrders
Goodtilcancelledorder
anorderwhichremainsineffectuntilexecutedor
canceled.

46

Types of Orders
TypesofOrders
Shortsale
sellingastockwithouttheshares
youexpecttobeabletobuytheshareslateratalower
price
youexpectthestockspricetogodown
NotyetallowedinthePSE
Not yet allowed in the PSE

47

Types of Orders
TypesofOrders
Stoplossorder
p
investordirectsbrokertosellhisstockifpricedropstoa
specifiedlevel

48

Stock Market Investing

StockMarketInvesting
InvestingProcedures
1. Choose
Chooseastockbroker,alsocalledatradingparticipant,fromthe
a stockbroker, also called a trading participant, from the
PSEslistofaccreditedbrokersonthePSEwebsite.
2. Openanaccount.

Fill outaCustomerAccountInformationForm.
Fillout
a Customer Account Information Form
SubmitIDpapersforverification
Stockbrokerwillassignatradertoassistinthebuying/selling
activity

3. Givetheordertobrokerandaskforimmediateconfirmationby
phone,emailorwhenordergetsdone.

49

S kM k I
StockMarketInvesting
i
4.Fortraditionalclients,paywithinthreeworkingdays
fromthetransactiondate T+3.
5.Foronlineclients,payontransactiondate.
li
li
i d
6.Receivefrombroker
If
Ifselling,proceedsofstocksaleafter3days
selling proceeds of stock sale after 3 days
Ifbuying,confirmationreceiptandinvoice.Ifphysical
certificateispreferred,mayrequestfrombrokerandpay
therequiredupliftment
q
p
feeofPhp50percertificateand
p p
transferfeeofPhp100+12%VAT.

50

Stock Market Investing

StockMarketInvesting
BoardLots
Theamountofsharesthatcanbeboughtand/orsoldis
subjecttominimumandincrementalboardlotsorround
lots.
TheBoardLotTabledeterminestheminimumnumberof
sharesthatcanbepurchasedorsoldataspecificpricerange.
Theminimumamountneededtoinvestinthestockmarket
The minimum amount needed to invest in the stock market
willdependonthemarketpriceofthespecificsecurityas
wellasitscorrespondingboardlot.
Pricesofstocksmovethroughascaleofminimumprice
g
p
fluctuationscalledticks.

51

Stock Market Investing

StockMarketInvesting
BoardLotTable
Marketprice(Php)

Ticksize

Lotsize

0.0001to0.0099

0.0001

1,000,000
,
,

0.01to0.049

0.001

100,000

0.05to0.249

0.001

10,000

0 25 to 0 495
0.25to0.495

0 005
0.005

10 000
10,000

0.500to4.99

0.01

1,000

5.00to9.99

0.01

100

10.00to19.98

0.02

100

20.00to49.95

0.05

100

52

S kM k I
StockMarketInves
ti
ting
BoardLotTable
Marketprice(Php)

Ticksize

Lotsize

50.00to99.95

0.05

10

100.00to199.90

0.10

10

200.00to499.80

0.20

10

500 00 to 999 50
500.00to999.50

0 50
0.50

10

1000.00to1999.00

1.00

2000.00 to4998.00

2.00

5000.00 andup

5.00

53

Stock Market Investing

StockMarketInvesting
CosttobuyashareofstockatapriceofP10.00:
Price pershare
Numberofsharestobebought

10.00
x

1,000
10,000.00

Brokerscommission(0.25% +12%VAT)

28.00

PSETransactionFee(Transactionvaluex0.005%)
(
)

0.50

SCCPFee(Transactionvaluex0.01%)

1.00

TotalCashOutlay

10,029.50

54

St k M k t I
StockMarketInvesting
ti
NetproceedstosellastockatapriceofP10.00:
Price pershare
Numberofsharestobe sold

10.00
x

1,000
10,000.00
,

Brokerscommission(0.25% +12%VAT)

28.00

Stocktransactiontax(Transactionvaluex0.5%)

50.00

PSE T
PSETransactionFee(Transactionvaluex0.005%)
ti F (T
ti
l
0 005%)

0 50
0.50

SCCPFee(Transactionvaluex0.01%)

1.00

NetCashReceivable

9,920.50

55

St k M k t I
StockMarketInvesting
ti
Therefore,atminimum0.25%commission,totaltwo
way cost is 1 10%
waycostis1.10%.

56

Stock Market Investing

StockMarketInvesting
Twowaycostatdifferentcommissionrates:
Ifbrokers
commissionis

Additionalcost
fromtwoway
trade

0.25%

1.10%

0.50%

1.65%

0.75%

2.21%

1.00%

2.77%

57

Returns from stock

investing
Capital Gains increase in the market price of a stock
from the buying price.
Cash Dividend A dividend given to shareholders in the
form of cash. It is computed by multiplying the number of
shares
h
h ld by
held
b the
h cash
h dividend
di id d rate declared.
d l d
Stock Dividend A dividend given to shareholders in the
form of additional stocks.
stocks It is computed by multiplying
the number of shares held by the percentage of the stock
dividend declared.
58

Returns from stock

investing
PropertyDividend
p y
dividendgivenintheformof
g
sharesofaninvesteecompany.Thesharesmaythenbe
soldintheexchangeatzeropurchasecosttotheseller.
StockRights astockrightsofferistheoptiongivento
thepresentshareholderstobuyadditionalsharesof
stock at a price lower than its market price.
stockatapricelowerthanitsmarketprice.

59

Top dividend paying stocks

Topdividendpayingstocks
Price
May22,2013

Forecasted 2013
2013
Netdividendyield
(%)

PLDT

3,178

4.9%

GlobeTelecom

1,599

4.1%

Ab iti Power
Aboitiz
P

37 10
37.10

3 8%
3.8%

280

3.6%

111

7.7%

Fgen

114.20

6.3%

Pure Foods
PureFoods

1,052

6.6%

SMC2A

79.90

6.3%

Commonshares

Semirara
Preferredshares
Petron

60

Approaches to stock investing

Approachestostockinvesting
WarrenBuffett
Dontfollowthedaytodayfluctuationsofthemarket.
Dontpredicttheeconomy.
Buyacompanythatyouunderstand,isprofitableandhave
favorablelongtermprospects.
Buyacompanyatadiscountofatleast25%toitsintrinsic
Buy a company at a discount of at least 25% to its intrinsic
value.
Investinaportfolioofbusinesses.
p

61

Approaches to stock investing

Approachestostockinvesting
PeterLynch
y
Ignoreshorttermstockmarketfluctuations.
Donttrytopredicttheeconomy.
Buyacompanythatisundervaluedregardlessofthemarket.
Takeadvantageofwhatyoualreadyknowtohelpyoupick
companies.
companies

62

Approaches to stock investing

Approachestostockinvesting
MarketWizards:InterviewswithTopTraders
p
byJackSchwager
Usetradingmethodsthatsuityourpersonality
Cutyourlossesandletyourprofitsrun.
Don'tunderestimatethetimeittakestosucceedasatrader.
Learnfromyourpasttrades.Haveatradingplanbefore
buyingyour1st stock.
Know when to do nothing
Knowwhentodonothing.
Dontlistentootheropinions.Makeyourowntrading
decisions
63

Approaches to stock investing

Approachestostockinvesting
MarketWizards:InterviewswithTopTraders
p
byJackSchwager
Don'ttakeonexcessiveleverage.
WallStreetresearchreportswilltendtobebiased
Exerciseemotionaldiscipline.Sticktoyourtradingplan.

64

Analyzing companies/stocks
Analyzingcompanies/stocks
Fundamentalanalysis
y
determiningvalueofcompany/stock
g
p y/
bylookingatfinancial&operatinghistoryandprospectsand
usingvaluationratios.
Technicalanalysis
T h i l
l i determiningdirectionofpriceofanasset
d t
i i di ti
f i
f
t
bylookingathistoricalpricesplottedonagraphandlooking
forpatternsandbyusingcalculatedindicators.

65

Analyzing companies/stocks
Analyzingcompanies/stocks
Analysisofstocksmaybesourcedfrombrokerswhichhave
y
y
researchteamsofanalysts,eitherfundamentalortechnicalor
both.
Youmaydoyourownanalysisbysourcingcompany
Y
d
l i b
i
informationfromcompanywebsites,thePSEwebsiteand
companiesinvestorrelationsoffice.
Equallyimportant,makeuseofwhatyouknowandwhoyou
know.

66

About RCBC Securities

67

RCBC Securities Inc. (RSEC)

RCBCSecuritiesInc.(RSEC)
y StockbrokerageunitofRizalCommercialBankingCorporation
(RCBC),Philippines5thlargestprivatecommercialbankanda
memberofYuchengco GroupofCompanies.
y Php460mnincapital,oneofthehighestintheindustry.
Php460mn in capital one of the highest in the industry
y Longtrackrecordofoperations establishedinAugust1973
asPacificBasinSecurities,andchangeditsnametoRCBC
SecuritiesInc.inJuly1995
y Offersbothtraditionalandonlineserviceandprovidesstock
market and corporate research to its clients
marketandcorporateresearchtoitsclients.

68

AccountTypes
yp
T diti
Traditional
l

O li
Online

Orderposting

Traderviaphone

Via www.rcbcsec.com

Settlement

y
T+3days

Presettlement

Research

MaterialsfromRSEC,inputsfrom
traders

MaterialsfromRSEC
posted onwebsite

Minimuminitial
Minimum
initial
balance

None

Php 10,000
10 000

Commissionrate

0.25%to1.5%

0.25%

69

AccountOpeningRequirements
(Traditional)
y AccomplishedCustomerAccountInformationForm(CAIF)
Accomplished Customer Account Information Form (CAIF)
SeeappendixA

y Filledoutsignaturecards
SeeappendixB

y 2validgovernmentissuedIDs
SeeappendixC

y Personalappearance
IfclientisunabletovisitRSECoffice,mayrequestforcertificationfrom
RCBC branch managers
RCBCbranchmanagers

70

AccountOpeningRequirements
(Online)
y Accomplish
Accomplishonlineapplicationformviawww.rcbcsec.com
online application form via www rcbcsec com
y Printout,signundertakingportionandsubmitoriginally
signedcopiesofform
y 2validgovernmentissuedIDs
y Personalappearance
If
IfclientisunabletovisitRSECoffice,mayrequestforcertification
li
i
bl
i i RSEC ffi
f
ifi i
fromRCBCbranchmanagers

71

Forinquiries,youmaycontact:
SheilaC.Chan
Sales and Trading Department RCBC Securities Inc
SalesandTradingDepartment,RCBCSecuritiesInc.
7/FYuchengco Tower,RCBCPlaza
6718AyalaAvenue,MakatiCity0727,Philippines
(632)8949000loc.1326
scchan@rcbc.com

72

Appendices

73

Appendix A: CAIF
AppendixA:CAIF
Softcopyavailableuponrequest

74

Appendix B: Signature Card

AppendixB:SignatureCard
Softcopyavailableuponrequest

75

AppendixC:ListofAcceptable
IDs
y
y
y
y
y
y
y
y
y
y
y
y
y
y
y
y
y
y
y
y
y

Passport
DriversLicense
PRCID
NBIClearance
PoliceClearance
PostalID
VoterssID
Voter
ID
Brgy.Certification
GSISECard
SSSCard
DSWDCertification
IntegratedBarofthePhilippinesID
SeniorCitizenCard
OverseasWorkersWelfareAdministrationID
OFWID
SeamansBook
AlienCertificationofRegistration/ImmigrantCertificateofRegistration
GovernmentOfficeID(e.g.AFPID,HDMFID)
CertificationfromtheNationalCouncilfortheWelfareofDisabledPersons(NCWDP)
C
CompanyIssuedIDforPrivateEntities
I
d ID f P i t E titi
StudentID
76