Introduction

The Philippine Stock Exchange (PSE) is gearing up for a significant change. It's introducing short selling, a practice that allows investors to bet on a stock's decline for potential profit. Abacus Securities has compiled a list identifying 46 stocks that are ripe for this strategy, based on factors like liquidity and average daily turnover.

Philippine Stock Exchange Short Selling

PSE is taking the domestic stock market to a new level by incorporating short selling, with the official launch date set for October 23. Ramon Monzon, PSE president and CEO, stated that the introduction is part of the exchange's broader effort to elevate the local capital market.

Regulatory Approvals for PSE Short Selling

The Securities and Exchange Commission and the Bureau of Internal Revenue have given the green light for this new feature. PSE has also obtained other necessary regulatory approvals, such as the acceptance of offshore as collateral and a license for the Philippine Depository & Trust Corp as a lending agent.

Abacus Securities Stock List

The comprehensive list created by Abacus Securities features stocks that have a high level of liquidity. According to Nicky Franco, head of research at Abacus, these stocks are “ideal” for short selling. Stocks with an average daily turnover of over P100 million like Ayala Corp., BDO Unibank, and Jollibee Foods Corp., top the list.

Average Daily Turnover in PSE Stocks

Franco elaborated on how the list has been segmented according to average daily turnover. Stocks with daily turnovers between P50 million and P100 million include AC Energy and Metrobank. Those with a turnover between P10 million to P50 million, like Aboitiz Equity Ventures and Megawide, are also considered good candidates.

Securities Eligible for Short Selling in PSE

Franco advised that stocks with a lower average turnover of P5 million to P10 million, such as Cebu Pacific and China Bank, should be shorted with caution and smaller positions. Stocks with a daily turnover of less than P5 million are considered illiquid and not recommended for shorting.

The PSE MidCap and PSE Dividend Yield indices include securities eligible for short selling, broadening the options for investors who wish to adopt this strategy.

Final Thoughts

Short selling in the Philippine Stock Exchange is a milestone in the local capital market. With the regulatory framework in place and a comprehensive list from Abacus Securities, investors are well-equipped to navigate this new avenue for potential profit.

Summary

The Philippine Stock Exchange is set to introduce short selling, with a launch date of October 23. Abacus Securities has identified 46 stocks as ideal for this strategy, segmented by their average daily turnover. All necessary regulatory approvals are in place, making this a major step forward for the Philippine stock market.