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The Philippines
AsiaSoutheast Asia

Philippines to debut short-selling for traders after 27-year wait

  • Starting on Monday, brokers will be able to lend shares that they don’t own to other borrowers once they have their own lending permits
  • The Philippines is embracing short-selling just as regional peers China and South Korea are tightening control over it

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The Philippine Stock Exchange will allow short-selling of stocks starting on Monday. Photo: Bloomberg
Bloomberg
After a nearly three-decade wait, traders will finally be able to short-sell stocks in the Philippines.
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A total of 52 stocks and one exchange-traded fund, including all the equities on the benchmark gauge, will be available for short-selling on Monday after regulators signed off on a proposal first made by the Philippine Stock Exchange Inc. in 1996.

“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,” bourse President Ramon Monzon said in an interview.

The Philippine Stock Exchange will allow short selling of stocks as of Monday. Photo: Bloomberg
The Philippine Stock Exchange will allow short selling of stocks as of Monday. Photo: Bloomberg

“With short selling, they can stay here and hedge,” he said, referring to foreign investors.

The Philippines is embracing short-selling just when regional peers such as China and South Korea are tightening control over it with emerging markets under pressure from higher US rates. Monzon is seeking to revive interest in a market where average daily stock transactions have slumped by almost 40 per cent in the past decade, and foreign equity investments are set to shrink for a sixth year.

“It’s definitely a step in the right direction and about time,” said Conrado Bate, president at COL Financial Group Inc., the nation’s biggest online stock brokerage. It will take time for investors and brokers to be familiar with shorting equities, he added.

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For the debut, the Philippine Depository and Trust Corp. is the only licensed lending agent that can provide shares that it does not own for short-selling. Other brokers can lend shares that they own to clients or borrow stocks that they do not have from the depository for a fee.

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