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Millennials are changing the game in the Philippine Stock Exchange 

April 17, 2017

Contributor

Cover art Samantha Gonzales with Freepik

This article was first published as The changing game at the stock market: From old boys’ club to millennials on BusinessWorld University Edition on November 5, 2015. It has been updated with recent data.

“A JUNGLE.”

That’s how the trading floor appeared to Mica Tan, who was then in her teens when she walked in the Philippine Stock Exchange (PSE) in high school uniform.

The colossal electronic board, its dizzying figures, bewildering codes, and people shouting from different corners formed an almost intimidating world that the curious Ms. Tan, with a backpack slinging on her shoulder, still set out to explore.

Her first mission was to find herself a mentor. Perhaps amused with finding a kid in a sea of coats‑and‑ties, the head of a brokerage firm agreed to teach her the ropes.

“I saw how important it was for them to make decisions in a second,” recalled Ms. Tan, who founded of an investment firm called MFT Group of Companies at the age of 20. In an interview, she shared the first lessons from she learned on the trading floor: which stocks to buy, how much, if they should hold or if they should sell. “And they’re not talking about some change,” she said. “They’re talking about millions.”

Ms. Tan is part of an ongoing shift in the stock market now seeing an influx of “millennials,” the generational cohort born between the early 1980s and the early 2000s, a long way from the market being formerly dominated by the “old boys’ club.”

Millenials on a Stock Market game

Art Samantha Gonzales with Freepik

Jose T. Pardo, the 75‑year‑old chairman of the PSE, compares this to his own career history, reeling in the time where he started trading in his late 30s. With “very limited funds,” he said, he invested only in “very select” dividend‑paying stocks.

“The PSE has joined the digital age, it is now information technology [I.T.]‑driven,” the chairman said. “The millennials, being tech‑savvy, are quick to adapt so we’re seeing an upsurge of younger stock market investors.”

As a result, brokerage firms have been prompted to change their strategy in a bid to cash in on this market.

Ramon Tejero, head of retail equities‑e.commerce of Maybank ATR Kim Eng, has observed that millennials are aggressive and are risk takers. His company regularly mounts coaching sessions for young people interested in investing in the stock market.

“They value speed, they’re highly mobile, and they want to do it themselves,” he said.

While millennials are known to value experiences more than material things, according to a study conducted by Harris and sponsored by Eventbrite, they may opt to go to the stock market because of its competitive nature. Mr. Tejero said that while millennials are “probably not yet at a stage where acquisition is more important to them, it’s all about experience.” He added that people who get a high in winning in sports also enjoy trading. “It also gets you high because it’s like a win. Not only are you sikat (popular), you have money in your pocket.”

Millennials have a higher risk appetite than their senior counterparts. They trade more often but in smaller amounts, while the older ones trade less often but pour in huge chunks of money.

“Since the seniors also trade in bigger amounts, they tend to be deliberate. They tend to be sure. They tend to study the trade before they enter it,” Mr. Tejero said. “The more senior clients would be still a handover from the previous generation which is a buy‑and‑hold generation. For millennials, it’s price action. You trade what you see.”

The PSE has joined the digital age, it is now IT‑driven. The millennials, being tech‑savvy, are quick to adapt so we’re seeing an upsurge of younger stock market investors.

The younger investors might be more inclined to say: “Tutal naman ₱20,000 lang ‘to, pwede ba ‘tong trade na ‘to? Sige na, may target price naman ako.” (Since it’s just ₱20,000, can I trade this? Come on. I have a target price anyway.)

Their actions are also driven by the “flexible” nature of their jobs—a lot of them coming from, say, business process outsourcing—which allows them to devote more time on their online portfolio and on monitoring the market, compared to the seniors who may be executives with very little spare time.

The main difference between the millennials and the Gen X? They trade daily, weekly, or monthly, unlike the latter who wait for a year or more.

“The frame of mind of the millennial is more different. They’re more opportunistic. They’re more risk takers,” Mr. Tejero said.

This makes online trading a perfect platform for the youth. Aside from providing mobility, it allows them to open an online account for as low as ₱5,000 and start trading real‑time, unlike before when investors would have to call their brokers to place an order, and wait, because with the limited resources that they had, brokers might prioritize those with higher bids.

Online stock market accounts grew 35.6% to 236,669 in 2015,  from the 2010 count of 35,559, data released last year by the PSE showed. In the same statement, PSE president and CEO Hans B. Sicat said: “We expect online trading to continue to drive growth in stock market accounts. We are hopeful that the rate of expansion we saw in the last five years will be sustained especially as more trading participants start offering online trading services.”

“If I could google ‘mentors’ 10 years ago, I would’ve done that,” Ms. Tan said. “But now, my eight‑year‑old niece would ask me if she could buy Apple Inc. stocks because she owns an iPad.”

“From old boys’ club to the rich kids’ club, I partly agree that there is a big transition,” Ms. Tan said. “But I also think that it’s not only the rich kids who get to appreciate it now. There’s a growing number of middle class tapping into stocks because they’re more educated on what to do with their money.”

The PSE affirms this view, noting that the income profile of investors has “become more skewed” to the lower income bracket.

Those earning half a million pesos or less every year took up 40.9% of investor accounts in 2015, from just 29.1% in 2010 when bulk of them earned more than P1 million (36.7%).

“Technology levels the playing field in providing access to our stock market as shown by the higher share of online investors from Visayas and Mindanao,” PSE’s Mr. Sicat said.

Even as majority or 72.7% of retail investors still come from Metro Manila, those from Luzon increased to 15% from 14.4% in 2010. Those from Visayas and Mindanao comprised 5.6% (from 2010’s 4.3%) and 2.8% (from 2010’s 1.8%) of the total accounts, respectively.

Investors based overseas accounted for 2.6% of the retail accounts, higher than the 1.2% share registered in 2010.

“It all ties down to the Philippines’ financial inclusiveness. It hasn’t reached yet that certain level that will allow us to be more aggressive to a higher level of financial inclusiveness,” Mr. Tejero said.

He said the fact that “90% of the Philippine population is below economic class C puts us way behind in terms of penetration rate.”

The gamification of the stock market thus seems to widen the access to the formerly old boys’ club‑dominated floors, letting in millennials who get a high from registering their first profit or their first dividend check. “In the terms of millennials,” Mr. Tejero said, “Achievement unlocked.”

Yet at the same time, not all endings are happy. “There are people who also lose money,” Mr. Tejero added. “That’s why education is important. You have to start the right way.”

For Ms. Tan, who remembers already having more than a passing concern about her future and her finances even as early as six, and who also remembers not having enough cash to buy stocks when she was a teenager, the stock market is like a “fast‑forward button” that will allow you to go faster wherever you want to go.

“Being in the stock market allows you to think the way big businesses do,” she said. “I would pretend I’m in Wall Street, when I’m in Ayala Triangle.”

In her own office at the Bonifacio Global City—a concrete jungle far larger than the trading floors she had since conquered—she looked back to the day she saw one company go public at the trading floor. “I said, ‘One day, I’d like to make that happen.’” 


Pola Esguerra del Monte and Krista Angela M. Montealegre contributed to this story

The author wrote this feature as a cover story for BusinessWorld University Edition when she was still on the PSE beat as a reporter for BusinessWorld. Ms. Magturo is now an equity analyst.

To learn more about Maybank ATR Kim Eng’s coaching sessions, visit their website www.maketrade.com.ph

The Philippine Stock Exchange has a market education site at www.pseacademy.com.ph