Investment Planning

Module 6
By: Ricky G. So, CIS, RFP®
Components
Who? Investor

Why? Objectives

How? Strategy

What? Financial Assets

Where? Local / Global

When? Cycle / Timing

Module 6 - Where?
Inv House and PDEX
Upon Issue

PRIMARY OFFER
- like “stock’s IPO”
- Issued at PAR
- Bought from accredited dealers

At Market

SECONDARY MARKET
- like “stock that is listed in the PSE”
- Traded either at PREMIUM or DISCOUNT
- Transacted thru accredited brokers
The PDEX

FIXED INCOME DEALERS

-are SEC registered securities dealer firms that are member of the PDEx Fixed
Income Market and the Self Regulatory Organization.

-These firms actively post bid and offer prices and buy or sell securities for
their
OWN account.
The PDEX Dealers
The PDEX Brokers

FIXED INCOME BROKERS

-are SEC registered securities dealer firms that are member of the PDEx Fixed
Income Market and the Self Regulatory Organization.

-These firms execute buy or sell orders for their CLIENT Investors’ account as
“public representatives” seeking the best available prices in the market and the
acting in the best interest of their Client Investor.

-They are trading participants who buy and sell securities for the account of the
others.
The PDEX Brokers
The Financial Market (Primary and Secondary)

The Result

Underwriter /
Company Inv. House

Bond Offering

Investors Broker
 The Philippine Stock Market

Locally, it is known as the Philippine Stock Exchange.

Established in 1927 known as Manila. Stock Exchange
(MSE)
*The oldest stock exchange in Southeast Asia.
Makati Stock Exchange (MKSE) established in
1963. MSE & MKSE were electronically linked in
1993.
as of February 13, 2015, total market cap is Php
12.28 trillion

*wikipedia
The Phil. Stock Exchange (PSE) List
The PSE Snapshot
www.pse.com.ph

The PSEi has 30

stocks in it.

All Shares Index is

272 stocks
The PSE Index (PSEi)
The PSE Brokers
The PSE Brokers
The Financial Intermediaries

Banks / Investment Investmen Stock Insurance

Trusts Cos. Houses t Broker Companies
Companies s
CA / SA
Time Deposits Promissory Mutual Funds Stocks VUL
Special Savings notes (PNs) ETFs
LTNCDs Comm’l. Papers
Tier 2 Notes T-Bills
MF / UITFs T-Bonds
Banker’s T-Notes
Acceptances Corp.
Repo AgreementsBonds
 MACROECONOMY

Cash &
Equities
Bond Market
Money
Market
Market Commodities Foreign
Pooled Funds
& Exchang
Market
Derivatives e
Market Market
The PHL Economy

People
Business
Government
Goods
Services
 The PHL Indicators

Source: Investopedia.com
The GNP/GDP Illustration

Citizens
X
Foreigners

Philippines
Citizens

Other Countries

Foreigners

Citizens
Philippines

20
The PHL Economy ~ Business

Borrowed
Capital

Equity
The PHL Economy Components

22
The PHL Economy - Variables

73%
11%
19%
3%

23
The PHL Economy - Variables

Consumer Spending (household)

Government Spending (Exec-Leg-Jud)

Capital Formation (business)

Net Exports (exports – imports)

The PHL Economy - Sector
The Business Cycle
Inflation

Consumer
Price Index Less:
(CPI) LPG, Oil, Gasoline,
Diesel, Kerosene
CORE
Rice & Corn
INFLATIO
HEADLINE Fruits and N
INFLATIO Vegetable
N s

27
Inflation

28
Inflation
Inflation

CONTROL MANAGE
Inflation / Deflation
Inflation

32
Inflation

33
Inflation

34
Inflation

35
Inflation

36
 Inflation Targeting Policy
Inflation > Interest Rate Policy > Business

Source: IDEA
Money Supply

Deposit Substitutes
M3
Savings & Time deposits
M1
M2

Money in circulation + CA
Monetary Board

- The monetary policy making

body of the Philippines.

- Seven (7) member body.

includes a cabinet member
ALL appointed by the
President of the Philippines.

39
Tools of the MB

Establishing reserve requirements for banks

RESERVE and other depository institutions;
REQUIREMENTS
Buying and selling government securities in
the open market;

%
Setting the interest rate at which the central
bank will loan funds to banks and other
depository institutions.

SDA Introduce special instruments to stabilize

erratic market conditions.
Reserves & ON
Reserve Requirements / Discount Rates

Bank Lends:
3.50%

P0.19
Reserve Bank Borrows:
5.50%

Deposits

P1.00
6.00%
P0.81 - 8.00%

Loans
Statutory Reserves Legal Reserves

Liquidity Reserves Secondary Reserves

Buying and Selling

BUYS
Treasury
Bonds

Government Securities SELLS

Special Instruments

SDA

SELLS
Directions
• Ways of controlling money supply:

Expansionary Restrictive
Monetary Policy Monetary Policy

Reducing reserve Increasing reserve

requirements RESERVE requirements
REQUIREMENTS

Buying gov’t. Selling gov’t.

securities securities

Lowering discount % Raising discount

rates to bank rates to bank

45
The Business Cycle
Interest Rates may Bottom Out
Stay Neutral / Trim Stocks move to non-cyclical
Sell Bonds
Stay Short
Interest Rates will likely
REBOUND
Interest Rates generally Underweight Long Bonds
DECREASING. Keep Defensive
Overweight Long Bonds Stocks
Overweight Cyclical Stocks Stay Short term
Underweight ST Build Cash
Reduce Cash Start Spotting
bargains

4 Phases of the Business Cycle

The 1st Key to Global
Investing
The 1st Key to Global Investing
End of Module 6
The Access Points