MANILA, Philippines – The major bourse of the country, the Philippine Stock Exchange (PSE), prepares for expansion of its item selection, emphasizing its requirement to introduce hedging investment instruments amid the expected forthcoming stock market volatility.

Roel A. Refran, PSE Chief Operating Officer, stated in an interview that the domestic stock market is anticipating for fresh products, such as short selling, personal equity and retirement account (PERA), and other risk-reduction choices to be unveiled this 2017. Refran stated that the mentioned products would advance their profile in the product offering.

The PSE index (PSEi) is undergoing drops for the second straight year in 2016, causing market participants to ready for another 12 months of raspy journey. On December 29, 2016, the PSEi closed at 6,840.64, which is exhibited by 111.44 points or 1.6 percent less than 6,952.08 in 2015.

The capital market accumulated for the entire 2016 is P170.12 billion, which is marginally lower than 2015 record of P184.60 billion.

The forecasted protectionist provision of the new U.S. President Donald J. Trump is one of the reasons why investors are still dubious. Furthermore, the U.S. Federal Reserve’s indication of three interest rate hikes and a possible Brexit realization have also influenced the incertitude of the market players.

Refran stated that his best hope is to pursue their new products launching, which would at least prepare the local bourse in the case of a market rebound.

According to him, it is now the suitable period to offer hedging products, such as short selling, in the midst of anticipated intensive whirling in the equity market. The official pertained to the activity wherein shares borrowing is done by investors for selling. Alongside is the optimism of the market participants to purchase these shares back at a lower value, which would allow them to resell the securities to the lender with the assurance of profit.

Under the Securities Regulation Code, short selling is allowed but the local bourse has yet to provide the rules for such activity.

The rules and regulations draft is still in progress of development under the Securities and Exchange Commission (SEC). The provision would cover the exchange of financial firms’ third-party instruments and structured warrants, which give investors a leeway to obtain exposure to an underlying asset offered at a small percentage of its value.

PERA was launched by the Bangko Sentral ng Pilipinas (BSP) in December, which is under the Personal Equity and Retirement Account Act of 2008 or Republic Act. No 9505. The objective of PERA is to serve as an investment product encouraging the Filipinos to set aside reserve after leaving work permanently.

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  1. I am curious where you got the numbers indicating capital accumulated? Can you pls. share with me. I want to monitor this data as well.

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