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The rapid rise of the retail investor

The global pandemic was an event no one was prepared for, leaving millions of deaths, unemployment, and economic meltdown. With millions forced to stay at home, the internet became a window for people to connect with their loved ones, conduct business, and bring back a sense of normalcy in their lives.

Facebook, Instagram, TikTok – the biggest sources of pandemic entertainment and trends. Various forms of social media are available for everyone to keep up with the latest frenzy. And the latest source of fascination? The Philippine Stock Market.

In 2019, the Philippine Stock Exchange reported a stunning 12.7 percent growth in total stock market accounts, with online investors leading the way. This boom in retail participation was mainly a result of convenience and accessibility of online investment platforms and investment learning programs. Then the pandemic suddenly accelerated the Filipinos’ adoption of technology, especially when it came to investing.

For instance, First Metro Securities Brokerage Corporation (FirstMetroSec), Metrobank Group’s stock brokerage arm, experienced a skyrocketing number of account applications at the advent of lockdowns. The ease of the online account opening process enabled any banked Filipinos to now have his/her own trading account. Many prospective investors also became keen to start investing, wisely following the old adage repeated by many of the industry’s legendary investors: “Buy when everyone is fearful, and sell when everyone is greedy”.

Thanks to education-centric stock brokerage firms like FirstMetroSec, more and more Filipinos are now less intimidated and more eager to learn the dynamics and nuances of the investing world. Learning programs that used to gather only 50 attendees pre-COVID are now generating 500or more online viewers. New investors are clamoring to learn more, with demand for intermediate and advanced level lectures reaching peak numbers.

This sudden influx of new investors contributed to the Philippine Stock Exchange Composite Index, or the PSEi, recovering relatively in the wake of a pandemic that caused a technical recession. To date, the PSEi has gone up by 70 percent after crashing to a low of 4,040 points back in March of 2020. Aside from clearly depicting the trust and belief of investors in the strength of the Philippine economy, the new money that came in helped hasten the pace of recovery.

Thus, in a world previously ruled by giants, the individual investors are making their presence known, proving that they are a critical force in the market. Both local and foreign institutional trading volume, which used to dominate the exchange, are now being challenged by retail.

With the aid of online trading, the rapid rise of the Filipino retail investor will continue. Retail investors are finally participating actively in the capital markets. There is so much more improvement needed to further expand investment and growth opportunities while mitigating risks — education, technology, investment products. But the trend has been established. The playing field has been leveled. Adversity has inspired opportunity. The Filipino retail investor is now a real force to reckon with.

 

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