Tips and Tricks for Overseas Filipinos Investing in Philippine Stocks

For Overseas Filipino Workers (OFWs) or Filipinos living abroad, investing in the Philippine Stock Exchange (PSE) offers a great opportunity to grow wealth and support the country's economy. However, it can be a bit challenging due to differences in time zones, access to information, and managing risks while living far away. Here are some tips and tricks to help you navigate stock investing from abroad.

1. Open an Online Trading Account with a Trusted Broker

• Many Philippine brokers offer online platforms where you can trade stocks from anywhere in the world. Some popular options include COL Financial, BDO Nomura, First Metro Securities, and BPI Trade.
• Ensure your chosen broker provides easy access to customer support, especially since time zones can be tricky for overseas investors.
• Look for brokers with low fees, robust online tools, and research support to help you stay updated with market trends and company disclosures.

2. Familiarize Yourself with Philippine Tax Laws

• Capital Gains Tax (CGT): There’s no capital gains tax for stock transactions if you hold shares that are listed and traded on the PSE. However, a 0.6% stock transaction tax is applied every time you sell shares.
• Dividends Tax: Cash dividends are subject to a 10% withholding tax for Filipino citizens, including those residing overseas. Make sure you account for this when calculating potential returns.

3. Choose Stocks with Strong Fundamentals

• As you may not have daily access to monitor your portfolio closely due to time differences or work commitments, it’s often a good idea to invest in blue-chip stocks. These are established, financially stable companies like SM Investments, Ayala Corporation, BDO Unibank, and Jollibee. These companies typically provide steady returns, dividends, and are less volatile.
• For those who prefer hands-off investing, consider exchange-traded funds (ETFs) or Real Estate Investment Trusts (REITs) like AREIT. These offer diversification and regular dividend payouts.

4. Take Advantage of Dividend Stocks

• As an overseas investor, you may not always be able to monitor the daily price movements of the market. Investing in high-dividend yield stocks can offer a more predictable return since these companies regularly distribute a portion of their earnings to shareholders. Dividend-paying stocks can provide a steady passive income stream, especially for long-term investors.
• Examples: PLDT (TEL), Globe Telecom (GLO), and REITs like Ayala’s AREIT, Inc.

5. Utilize Auto-Invest Features or Cost Averaging

• Consider adopting a peso-cost averaging strategy by regularly investing a fixed amount in select stocks, regardless of market conditions. This strategy helps reduce the impact of volatility over time.
• Some brokers, like COL Financial, offer auto-invest options where you can set recurring investments to certain stocks or mutual funds. This is ideal if you can’t actively trade due to time constraints.

6. Stay Updated with Local Market News

• Keeping up with the Philippine economy and market news is crucial for making informed investment decisions. Since you’re abroad, it’s important to stay connected through financial news websites like BusinessWorld, Inquirer.net, and Rappler, or follow local stock analysts on social media.
• Many Philippine brokers also offer market analysis and research reports. Subscribing to newsletters or using mobile trading apps with news alerts can keep you in the loop, especially when major economic or corporate announcements are made.

7. Leverage Currency Conversions

• Since you are earning in foreign currency, fluctuations between the Philippine Peso (PHP) and your local currency can impact your returns. Timing your currency conversions well can maximize your buying power when investing in the PSE.
• When the PHP is weaker compared to your currency, it’s an opportunity to transfer funds and invest, as your money will go further.
• Use remittance services that offer favorable exchange rates and low transfer fees when sending investment funds back to the Philippines.

8. Take Note of Trading Hours and Time Zones

• The PSE operates from 9:30 AM to 3:00 PM (Philippine time), so you’ll need to manage the time difference depending on where you live. For instance, if you’re in the Middle East or Europe, the market opens early in the morning; if you’re in the US or Canada, you’ll likely need to stay up late.
• Many online platforms offer after-hours trading or allow you to set limit orders and stop-loss orders, which can be executed even if you’re asleep or not actively monitoring the market. This helps you protect your investments in case of sharp price movements.

9. Be Mindful of Market Liquidity

• Some stocks in the PSE can be illiquid, meaning they don’t trade frequently. This can make it hard to sell your shares when you need cash or when market conditions change. Stick to more liquid stocks, like those in the PSEi, which are traded more frequently and have better market depth.

10. Consider the Long-Term Approach

• As an overseas Filipino, you may want to adopt a long-term investment strategy, especially if you have limited time to actively trade. Long-term investing in growth stocks or index funds helps reduce the emotional stress of market volatility.
• Focus on accumulating shares over time and reinvesting dividends to compound your wealth for long-term financial goals, such as retirement or buying property in the Philippines.

11. Create an Emergency Fund

• While investing in the stock market offers opportunities for high returns, it is also volatile and risky. Make sure you have an emergency fund equivalent to 6–12 months’ worth of living expenses before diving deep into stock investing. This fund can cushion you from unexpected financial needs, job loss, or market downturns.

12. Stay Connected with Fellow Investors

• Join online communities or groups specifically for OFW investors. These communities can help you stay updated with the latest strategies, market trends, and stock recommendations. Platforms like Facebook, Reddit, and even broker-hosted webinars can provide valuable insights for Filipinos investing from abroad.

Final Thoughts

Investing in the Philippine stock market can be an excellent way for overseas Filipinos to build wealth, secure passive income, and support the country’s growth. By using a long-term, disciplined approach and leveraging modern online trading tools, OFWs can enjoy the benefits of stock investing from wherever they are in the world.

How to Make the Most of the PSE

1. Stay Informed: Regularly monitor company disclosures, market news, and macroeconomic indicators like interest rates, inflation, and GDP growth that can influence stock prices.
2. Understand Technical and Fundamental Analysis: Learn how to evaluate stocks through technical analysis (price charts, trends) and fundamental analysis (financial health, earnings reports).
3. Consider Mutual Funds or ETFs: If direct stock picking seems daunting, consider investing in mutual funds or ETFs that are traded on the PSE to diversify risk and gain exposure to a basket of stocks.
4. Long-Term Focus: While short-term trading is possible, the PSE, like most stock markets, tends to reward investors who stay invested over the long term. Patience and disciplined investing can yield significant returns over time.

Notable Listed Companies

• SM Investments Corporation (SMIC): One of the largest conglomerates in the Philippines, with ventures in retail, real estate, and banking.
• Ayala Corporation (AC): A major holding firm with interests in infrastructure, telecommunications, banking, and renewable energy.
• BDO Unibank, Inc. (BDO): The country’s largest bank by assets, providing a wide array of financial services.
• JG Summit Holdings, Inc. (JGS): A conglomerate with a presence in food and beverages, airlines (Cebu Pacific), and petrochemicals.

Final Thoughts: Is the PSE for You?

The PSE offers a wide variety of opportunities for investors, whether you're a local looking to grow your wealth or an international investor seeking exposure to the vibrant Philippine economy. By understanding the different indices, products, and market mechanics, investors can strategically position themselves to capitalize on the country’s economic growth. With a diverse portfolio and a clear strategy, the PSE can serve as a key vehicle for financial success.

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Philippines, REITs (Real Estate Investment Trusts) with strong promising long-term outlook.

 

1. Ayala Land REIT (AREIT):

   • Type: Mix of office, retail, and industrial properties
   • Dividend Yield: Approximately 6.36%
   • Outlook: Supported by a diverse portfolio and strong backing from Ayala Land, this REIT is well-positioned for steady growth.

2. DoubleDragon Properties REIT (DDMPR):

   • Type: Office properties
   • Dividend Yield: Around 7.87%
   • Outlook: With its focus on office properties, it has a stable income stream but may face challenges if remote work trends persist.

3. Filinvest REIT (FILRT):

   • Type: Office properties
   • Dividend Yield: About 8.33%
   • Outlook: Offers a high dividend yield, making it attractive for income-focused investors.

4. Robinsons Land Commercial REIT (RCR):

   • Type: Office properties
   • Dividend Yield: Approximately 7.44%
   • Outlook: As the largest REIT in the Philippines, RCR benefits from extensive geographical coverage and a strong credit rating, suggesting robust long-term performance​.

5. Megaworld REIT (MREIT):

   • Type: Office properties
   • Dividend Yield: Around 7.26%
   • Outlook: Backed by Megaworld, it has a strong portfolio of high-quality office spaces.

6. Citicore Energy REIT (CREIT):

   • Type: Renewable energy assets
   • Dividend Yield: Approximately 7.58%
   • Outlook: With a focus on renewable energy, CREIT is well-aligned with global sustainability trends, potentially providing stable and growing returns.

7. Vista Land REIT (VREIT):

   • Type: Retail properties
   • Dividend Yield: About 9.63%
   • Outlook: Its focus on retail properties could offer high yields, though it may be sensitive to economic cycles.

8. Premiere Island Power REIT (PREIT):

   • Type: Energy assets
   • Dividend Yield: Around 9.43%
   • Outlook: Similar to CREIT, it benefits from the growing energy sector, providing a stable investment opportunity​.

These REITs are generally expected to perform better in the long term due to anticipated lower interest rates and a more favorable market environment. Investing in these REITs could provide both income through dividends and potential for capital appreciation over time.