Traders in the Philippines will now be allowed to short-sell stocks after a near 30-year wait.
A proposal to allow short-selling was first aired by the Philippine Stock Exchange (PSE) back in 1996. However, it has taken three decades or so for the trading strategy to become a practical reality.
The Securities and Exchanges Commission initially approved the proposal in 2019, pending further market consultation, but the Covid pandemic prolonged its passing.
As of November 6, a total of 52 stocks and one ETF traded on the PSE will be accessible to traders. These are mostly stocks included in the main PSE Index as well as selected stocks from the PSE MidCap and PSE Dividend Yield indices.
According to the exchange’s president, Ramon Monzon, the move will give investors more options for dealing with volatile market conditions.
“Without short selling or any index futures we will be a long-only market, so if there’s uncertainty on the economy, the political situation or even in emerging markets, they will all sell,” he told Bloomberg. “With short selling, they can stay here and hedge.”
The PSE is also looking to attract more foreign investors to the Philippines securities market at a time of low activity. Average daily stock transactions have fallen by nearly 40% in the past decade while foreign investors have withdrawn more than US$6bn since 2018.
However, given that many stocks in the Philippines market are trading at a low valuation, the opportunities for big gains from short-selling will be limited in the short term.
©2023 funds global asia 
At times like these, HSBC Asset Management easily pivots towards emerging markets.
The spotlight on growth markets and the need to be nimble and dynamic is ever-sharper, given the difficulty in predicting monetary policy in the world’s major nations.
A comprehensive, cost-effective, and transparent currency overlay hedging solution is crucial to mitigate FX exposure risks in the complex landscapes of Japan and China's FX markets, explains Hans Jacob Feder, PhD, global head of FX services at MUFG Investor Services.
Contradictory market sentiments from commentators have impeded the decision-making powers of the first wave of AI-powered ETFs, says Alvin Chia of Northern Trust Asset Servicing.
The world is transitioning from an era of commodity abundance to one of undersupply. Ben Ross and Tyler Rosenlicht of Cohen & Steers believe this shift may result in significant returns for commodities and resource producers over the next decade.
Ross Dilkes, fixed income portfolio manager at Wellington Management, examines the opportunities and risks for bond investors presented by the region’s decarbonisation agenda.
Shareholders in Japan no longer accept below-par corporate governance standards. Changes are taking place, but there are still areas for improvement, says Tetsuro Takase at SuMi Trust.
