website: www.pse.com.ph

1
INVESTING IN THE STOCK MARKET
Best Practices Forum Series April 22, 2009
website www.pse.com.ph e-mail
pirs_at_pse.com.ph tel.no [phone]
2
Presentation Outline

• Updates on the Stock Market
• Investing in stocks
• PSE initiatives

3
Stock Market Performance
Performance of PSEi
Up by 21
Up by 42
Up by 12
Up by 15
Up by 26
Up by 42
Down by 48
as of April 17, 2009
www.pse.com.ph
4
Stock Market Performance
PSEi since the subprime crisis
Lehman Brothers and Merrill Lynch collapse, AIG
bailed out by US government
Crisis low of 1,704.41 pts (10/28)
www.pse.com.ph
5
Stock Market Performance
PSEi vs. other key Asian Stock Market indices
DJIA down by 7.4 YTD
www.pse.com.ph
6
Stock Market Performance Sector Level
Performance of Sector Indices (2007-April 17,
2009)
Financial Sector
Industrial Sector
Holding Firms Sector
Up by 12 2007
Up by 18 2007
Up by 5 2007
Up by 15 YTD
Up by 13 YTD
Up by 35 YTD
Down by 47 2008
Down by 56 2008
Down by 52 2008
Mining Sector
Property Sector
Services Sector
Up by 17 2007
Up by 28 2007
Up by 4 YTD
Up by 85 2007
Up by 28 YTD
Up by 4 YTD
Down by 62 2008
Down by 40 2008
Down by 58 2008
www.pse.com.ph
7
Stock Market Indicators
Total Market Capitalization (in Php billion)
Domestic Market Capitalization (in Php billion)
Total Capital Raised (in Php billion)
Average daily value turnover (in Php billion)
www.pse.com.ph
8
Stock Market Indicators
Net Foreign Transactions (in billion pesos)
www.pse.com.ph
9
The markets underlying economy

• Impact of the crisis in the broad economy
• Job losses unemployment up slightly to 7.7
  (Jan. 09) from 7.4 (Jan. 08)
• Some foreign firms closing shop
• Exports slowing down down 40 first 2 months

• Government projects GDP growth of 3.1 to 4.1 in
  2009

www.pse.com.ph
10
The markets underlying economy

• Local banks are highly capitalized
• Fiscal measures for the past few years have
  allowed for flexibility in spending
• Gross international reserves are at an all-time
  high
• Large dependence on domestic consumption
• Inflation tapering off
• Liquidity still growing
• BPO and OFW provide various multiplier effects in
  the economy
• Increased infrastructure spending
• Resilience of OFWs

The Philippines has a story to tell
www.pse.com.ph
11
Asian growth rates
2009 based on ADB forecasts as of March 2009
www.pse.com.ph
12
Investing in the stock market

• There are about 400,000 accounts in the stock
  market, less than ½ of 1 of the countrys
  population
• - vs. other markets 10 -30 of their
  population invest in the stock market
• Saving vs. Investing
• Common misperceptions
• Rocket science
• Entails huge investments

www.pse.com.ph
13
Investing in the stock market
The market as the barometer for economic
performance

• Positives
• Economic growth
• Low inflation
• Low interest rates
• Good employment figures
• Good governance
• Political stability

• Negatives
• Slow down in economic activity
• High inflation
• Rising interest rates
• Risk aversion
• Declining world market
• Governance concerns

www.pse.com.ph
14
Investing in the stock market
Market valuation as window to the performance of
a company

• Positives
• Positive profits
• Stable financials (good return ratios)
• Clear cut business plan
• Regular dividend payments
• Low P/E ratios
• Practice of good corporate governance

• Negatives
• Negative growth/equity
• Leverage levels
• Unclear business direction
• No fundamentals
• Poor investor relations

www.pse.com.ph
15
Sector Financial Ratios
Price-Earnings (P/E) Ratio per Sector
www.pse.com.ph
16
Sector Financial Ratios
Dividend Yield per Sector (in )
www.pse.com.ph
17
Investing in the stock market
Its funny, the more I practice, the luckier I
get. - Gary Player
www.pse.com.ph
18
About the PSE
Manila Stock Exchange (1927)
Makati Stock Exchange (1963)
Merged in 1992
As of April 15, 2009 No. of listed companies
246 Market Capitalization P4.43
trillion Ave. Daily Value turnover
P1.99 billion Trading Participants 184
(132 Active)
Provides platform for trading equity products,
warrants, and deposit receipts
www.pse.com.ph
19
About the PSE
PSE Historical Time Line
PSE sold 16.5 of its authorized capital stock to
strategic investors thru private placement.
The SEC granted the PSE its license to operate as
a securities exchange
The Makati Stock Exchange, Inc. (MkSE) was
organized
PSE was demutualized
The SCCP became a wholly-owned subsidiary of PSE
The Manila Stock Exchange, Inc. (MSE) was
established
Makati Stock Exchange Manila Stock Exchange
merged to become PSE
SEC conferred SRO status to the PSE.
PSE Listed by way of introduction
PSE declares 100 stock dividend
1994
1992
1998
2001
1927
1963
2003
2004
2008
www.pse.com.ph
20
Embarking on a new strategic agenda
The investor of today does not profit from
yesterday's growth. - Warren Buffet
www.pse.com.ph
21
STRATEGIC AGENDA
L
ist more companies and securities
E
xpand and educate the investor base
V
alue and enforce corporate governance standards
E
nhance shareholder value
L
aunch new products and services
U
pgrade market infrastructure human resources
P
artner with government other stakeholders
www.pse.com.ph
22
Strategic Initiatives

• List more companies and securities
• - Liberalization of listing rules for mining
  companies
• - Help enforce laws requiring the public
  offering of shares of companies in various
  sectors such as power, oil, utilities and
  telecommunications
• - Special tax incentives for newly-listed
  companies

• Expand and Educate Investor Base
• 3-unit subject for college students (CMO 39)
• Certified Securities Specialist Course (12-module
  course) Short Course on Stock Market Investments
  3-day course
• Inclusion of stock market topics in High School
  curriculum

www.pse.com.ph
23
Strategic Initiatives

• Value and Enforce Corporate Governance Standards
• - Heightened enforcement of disclosure rules
• - 10-minute rule
• - Selective disclosure rule
• - Blackout rule
• - Creation of Market Integrity Board
• - Institutionalization of the corporate
  governance scorecard for publicly-listed
  companies
• - Creation of a Special CG Segment in the PSE
  (funded by the UK government)

www.pse.com.ph
24
Strategic Initiatives

• Enhance Shareholder Value
• Dividend policy by listed companies
• Website publication of dividend pay-outs by
  listed companies
• - Corporate Governance Improvement Plan for the
  PSE -
• Extended trading hours
• Office integration

• Launch new products and services
• Securities Lending and Borrowing Program
• REIT product
• Exchange Traded Funds
• Index futures and options
• Commodities trading

25
Strategic Initiatives

• Upgrading Human and Physical Resources
• New trading system
• Enhanced Surveillance system

• Partner with government and other stakeholders

• - Personal Equity Retirement Account Act
  (PERA) enacted into law
• Credit Information System Act (CISA) enacted
  into law
• Real Estate Investment Trust - passed by Senate
• Abolition of DST on secondary trading passed by
  the House of Representatives on third and final
  reading
• Corporate Recovery and Insolvency Act (CRIA)
  technical working group report done last Congress
• Collective Investment Scheme Law (CISL) -
  technical working group report done last Congress
• - ASEAN Collaboration - MOA signed with ASEAN
  Exchanges

26
Fortune favors the brave. -Virgil, Aeneid
www.pse.com.ph
27
THE PHILIPPINE STOCK EXCHANGE
Disclaimer This presentation has been prepared
by the Philippine Stock Exchange(PSE) for
exclusive use of the party/ies to whom the
presentation is being delivered. The PSE and its
affiliates, officers, directors, employees and
agents do not make representations or warranties,
express or implied, on matters such as, but not
limited to, the accuracy, timeliness,
completeness, currentness, non-infringement,
merchantability or fitness for any particular
purpose of the information and data herein
contained. The PSE assumes no legal liability
and responsibility for any loss or damage arising
from any decision made or action taken in
reliance of information contained herein, or for
the consequences of any errors or omissions, and
does not represent that the use of information
and date herein contained would not infringe
privately owned rights. In no event shall the PSE
or any of its affiliates, officers, directors,
employees, or agents be liable for any loss or
injury caused in whole or in part by
contingencies beyond their control or negligence
in procuring, compiling, interpreting, editing,
writing, reporting, or delivering the contents of
this presentation. The information contained
herein is solely for information purposes only,
does not constitute investment advice, and is not
intended to influence investment decisions.
Advice from a securities professional is strongly
recommended before making any legal, financial,
or other important decisions.