Tracking market as second nature

Before today, when the interest in the Philippine stock market is perceived as being slow, it did in the early days of the pandemic spike, according to Luis Limlingan Regina Capital Development Corp., (RCDC) head of sales.

“I guessed that people were working from home or couldn’t find employment. So, the best way I think for them to make money was to trade online,” he said, saying that in 2021, the volumes of stocks traded increased. He, however, noted that there was a gradual winding down.

“I think because of technology now, people have access to a lot of apps, which gives them access, for example, to foreign markets,” he said. “They want to trade or they want to look into crypto. I remember everyone was asking, and it was all the rage two to three years ago about non-fungible tokens (NFTs). So, I think there’s more good and bad,” the stock trading executive said.

As it’s available to the public and they can trade other types of instruments, Limlingan said it inflicted negative effects on their business as it indicated less dedication to the equities market as to the nature of what they trade.

He also noted that some individuals, particularly those who are younger, aspire to generate substantial returns within a few weeks or days.

“So, probably you will look into commodities, and that’s why Bitcoin may be into the US. And I guess they’ve seen that some of the Philippine stocks [it] has its fallbacks that probably the returns might not be or the potential for huge returns might not be what they’re looking for,” he said.

According to him, the local stock market is in a high inflationary environment with low growth, and he thinks there was an inclination for both retail and institutional investors to stay away from the Philippine market at that time.

“Given that, especially if you’re on the view of the foreigner when they look into markets outside their own, let’s say a US fund manager or an EU fund manager if they’re looking into the Philippines, probably the allocation is very small, right? Maybe 2 percent, 1 percent. So, it’s very minuscule that probably for that 1 percent or 2 percent that they have, they probably just add it maybe to their basket of other ASEAN, China, or Japan equities instead rather than taking a risk in the Philippines. That is how I see it, why the interest hasn’t peaked as we have seen during the pre-pandemic levels,” he said.

Now ·that people are gradually going back to work, they have less time to trade into the market, Limlingan said, citing that if you’re working full-time, it’s hard for someone to monitor, adding to the probability of them going back to the traditional route — buying into funds, buying passively instead of trading, or doing some day trades.

Upcoming key events

Several key events will dictate the trajectory of the stock market globally.

There is the Fed meeting next week — the reason for investors watching the inflation of the US and the unemployment figures.

“After that, of course, whatever the Fed decides, I think they’re going to read into the rhetoric as to what will be the timing of the next Fed rate cuts. They’re saying that’s already a base case that they’re going to be cutting rates by 25 basis points. And some are saying there’s even a possibility of 50 basis points. But I think the base case is 25 basis points. Hopefully, the data isn’t too alarming that the Fed has to make any abrupt rate cuts,” Limlingan said.

Investors are also gauging for the US elections — set to occur in six weeks — as this will determine what will be the priorities of those respective presidential candidates moving forward.

Third, the geopolitical outlook outside of the US.

“Is Japan the next market that they’re monitoring after they raise rates and it’s the end of cheap borrowing? Is there going to be a slowdown in China, given that that data hasn’t been emerging? What about with respect to Israel and Gaza? Will there be further provocation from either side? And much more. So those are probably on the radar of most of the investors,” Limlingan said.

Among these, he said the one that would probably have a strong effect on the market is the US elections, as it is inevitable.

“There’s going to be a new president. So you have to gauge what will be that administration’s priority moving forward. Everything else, I think, is just a wait-and-see. We’re hoping, of course, that the conflict between Israel and Gaza subsides. But you never know when there could be a strike,” he said.

Best is yet to come

RCDC started its operations on 10 December 1989, with its performance based primarily on its reputation, expertise and experience.

According to Limlingan, his parents started the business when they came back from the Philippines after the coup, in which they were offered the reward seats, being auctioned during that time.

“They submitted the bid, and thankfully, they won the seat. And that’s why we started with that business. And, of course, we’ve seen, again, we witnessed the beginning of the coup,” Limlingan said.

He said that during these times, their business faced various challenges, such as the eruption of Mt. Pinatubo, the Asian financial crisis, the dot-com bubble, the US recession in 2008, and the recent strike pandemic.

Limlingan said their business started as his father had the impression that it would be less risky to start a business that had zero to no inventory and little capital required.

“I think in terms of personnel and training, it would be very minimal. At the very least, if you want to be just a pure transactional type of broker, you need someone in the back office, a trader to execute, and a messenger. That’s at the very least. But of course, we are full-service and dedicated. That’s why we have research people and sales because we’re able to grow it. But I think that was his view when he started the business, he said.

As a young boy, Limlingan said he was exposed to stock trading, as his parents would always talk about the market during dinner time, where he said everything just went in one ear and out. It was not until he was in high school or college he understood it.

“Since I’m the youngest, they got a better feel early on. And then I just followed, and they were able to guide me. It’s a natural progress. since everybody’s in the business, you’d be in it. I guess you just gravitate towards it given the sphere of influence from the family and what you hear from your friends who are also interested. And probably also our family friends as well, who they are closely associated with,” he said.

In May 1996, RCDC expanded its network by setting up a branch in Iloilo while retaining its philosophy of being a private broker.

Its directors decided in 2012 to further strengthen its sales force by having a dedicated team specializing in different market categories while remaining open to various local and international tie-ups. RCDC later migrated from manual time stamping to computerized time order taking.

RCDC launched its online trading platform, Regina Online Investing, recently, providing clients to take full control of their trading portfolio by executing orders independently.