How Filipino Investors can buy IPO Stocks while the PSE remains Quiet
There have been no IPOs held this year so far. And, while some companies have expressed interest to list in the PSE in the near future, none have given concrete dates
Among the biggest events that can happen in a stock exchange is an initial public offering (IPO), or when a company lists its shares on an exchange and makes it available to the public. While IPOs bring numerous benefits to the businesses going public, many investors are also excited for a new stock option to potentially add to their portfolios.
Some investors prefer buying IPOs for the potentially large upside in the weeks or even days following their listing. This, of course, can go both ways—that is, IPO prices can also experience sharp declines after listing. With no previous stock price movements to go by, IPO stocks can be very volatile, enticing investors with a higher tolerance for risk.
Unfortunately, Filipino investors who like following IPO stocks haven’t been very active lately. The newest listing on the Philippine Stock Exchange (PSE) happened on June 29, 2018, which meant that it has been a year since the last IPO as of the time of writing. A number of companies were planning to list in 2018 as well, but they postponed their listings indefinitely due to unfavourable market conditions.
That trend seems to be continuing to 2019 as well. There have been no IPOs held this year so far. And, while some companies have expressed interest to list in the PSE in the near future, none have given concrete dates.
So how can Filipino investors buy their IPO stocks when the market is still quiet?
Luckily, the PSE’s lack of IPOs doesn’t carry over to other stock markets abroad. The Hong Kong Stock Exchange (HKEx) has had 16 new company listings for the year so far, while the New York Stock Exchange (NYSE), the largest stock market in the world in terms of market capitalisation, had six IPOs in the first three weeks of June alone.
One of those June NYSE IPOs is Slack Technologies Inc., the company behind instant messaging app and work productivity tool, Slack. Instead of the traditional IPO model, Slack went for a direct listing process, which means that the company didn’t have any middlemen when it listed its stocks on the NYSE.
While many Filipino professionals can easily access Slack on their desktops or smartphones and use it for work every day, that ease doesn’t translate well to its IPO. The shortage of prominent local options that invest in foreign stock markets, as well as the lack of dedicated spaces to discover and discuss these stocks, deters local investors from participating in these IPOs.
Making Foreign Stocks Accessible
Fortunately, there are digital platforms currently available in the country that aim to solve these issues, allowing Filipino users to invest in foreign assets and discuss them with other like-minded individuals. One of these platforms is eToro, a social trading platform that enables its users to invest in the NASDAQ, the HKEx, and many large stock markets abroad. Investors don’t have to limit their portfolios to their local stock markets, and traders can diversify their portfolios outside of stocks.
eToro also gives opportunities to new investors who are not as knowledgeable about these markets with its CopyTrader feature. If a user finds an investor on eToro’s platform whose trading strategy they admire—an investor might have consistent returns per month, or they prefer investment vehicles that fit your risk tolerance—they can copy the investor and have their investments be implemented into their own portfolio. Through copy trading, new investors can experience the same profits and upsides as trading professionals.
Filipino investors are thus able to participate in the IPOs of their favorite foreign brands through eToro. With IPOs of prominent multinational companies in the horizon, such as co-working space operator WeWork and hospitality firm Airbnb—both of which are already present in the Philippines—the platform gives investors the opportunity to buy their stocks once they go public.
Investing in foreign companies will not only diversify your portfolio beyond the 272 stocks on the PSE, it will also expose you to the various growth opportunities found in stock markets abroad. That blockbuster IPO stock you’ve been looking for might just be in a bigger—and louder—stock market.
Sarah Santos is currently a stockbroker at AB Capital Group. She has previously worked for AP Securities, Maybank, and the Philippine Stock Exchange. She graduated with a Business Administration major in Financial and Investment Managements from Miriam College.