What you need to know before trading stocks on GCash

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MANILA, Philippines – Mobile wallet GCash will soon roll out a stock trading platform within its app, making it possible for its 66 million users to trade equities.

GCash’s massive user base is significantly higher than the 1.6 million local investors currently trading through traditional stock brokerage houses on the Philippine Stock Exchange (PSE).

The Ayala-led company teamed up with AB Capital Securities and collaborated with the PSE for the platform.

It aims for a nationwide launch by early 2023, giving users the opportunity to be a shareholder of close to 300 publicly listed companies.

GStocks will be available to fully verified GCash users without the need for a bank account. The payment platform will also be offering free top-up and withdrawal services.

Users will be able to buy and sell local shares in real time; monitor pending trades, portfolio performance, and returns via a dashboard; and access a stock watch list as well as analytics tools.

Trading equities can be quite risky and investors’ cash can be quickly wiped out if they get easily swayed by the market’s emotions and end up holding on to “stonks” (a deliberate misspelling of stocks, used when a loss is made).

Here’s an overview of stock trading and some considerations before getting started in the world of equities:

What are stocks anyway?

A stock refers to a certificate that indicates ownership of a company. When you buy stocks of a publicly listed company, you become a stockholder or shareholder of that company. 

As a part-owner, you participate in the company’s growth and future profits. You may also lose cash if the company suffers a loss or performs below market expectations.

You can buy and sell stocks of companies in the PSE through a brokerage firm. When GStocks is rolled out, you will be able to do so via the GCash app.

Other terms for stocks are shares or equities. (WATCH: Rappler Talk: Bulls, bears, and other beasts of the stock market)

You can’t buy just one share of stock. The PSE, like other exchanges, implements a board lot system. 

The minimum amount needed to invest in stocks varies and will depend on the market price of the stock as well as its corresponding board lot. For example, a company with a stock price of P0.25 would require an investor to buy at least 10,000 shares, while pricier stocks worth P5,000 have a lot size of 5.

From To        TICK SIZE  LOT SIZE
0.0001 0.0099 0.0001 1,000,000
0.0100 0.0490 0.0010 100,000
0.0500 0.2490 0.0010 10,000
0.2500 0.4950 0.0050 10,000
0.5000 4.9900 0.0100 1,000
5.0000 9.9900 0.0100 100
10.0000 19.9800 0.0200 100
20.0000 49.9500 0.0500 100
50.0000 99.9500 0.0500 10
100.0000 199.9000 0.1000 10
200.0000 499.8000 0.2000 10
500.0000 999.5000 0.5000 10
1000.0000 1999.0000 1.0000 5
2000.0000 4998.0000 2.0000 5
5000.0000 UP 5.0000 5
How do you earn?

You can earn once the shares of the company you bought increase in value. The difference between the amount you paid when buying shares and the current market price would be your earnings. 

You cannot really “earn” from the price increase unless you sell your shares. It is important to time when to buy, sell, or hold, as market forces change daily.

Keep in mind that brokerage firms also charge for their services, so check the rates before selling or buying. GCash has yet to detail the fees for GStocks.

One can also earn through dividends, or the earnings of the company that will not be reinvested in the business. Dividends can be in the form of cash or stocks.

Cash dividends are declared by the company for every share of stock. For instance, a company says it will give out 25 centavos per share. A stockholder with 10,000 shares will receive a cash dividend of P2,500, minus the applicable charges.

Meanwhile, stock dividends are additional shares given to shareholders. For instance, a company may declare a 25% stock dividend, giving a stockholder with 10,000 shares an additional 2,500 shares of stock.

What makes stock prices go up or down?

Stock prices rise and fall due to an array of factors. It is crucial to carefully study the company, its current and future projects, financials, and other news related to the firm or the industry, as these may likely sway prices.

A bull market occurs when prices of stocks rise and indicates that the market is bullish. Think of a bull thrusting its horns upward. Typically, investors say the market is bullish when stock prices are up by 20% over just a couple of months.

If prices are depressed by 20% for a sustained period, a bear market occurs. Think of a bear swiping its paws downward.

Investors also look at trading volume or the number of shares traded on a particular day or week to plan their next move. (READ: Know your stock market lingo)

There are two main schools of thought in analyzing stocks. Fundamental analysis uses economic data, historical financial information, and projections. Meanwhile, technical analysis looks at charts and the market psychology in choosing a stock.

In general, fundamental analysis is used by long-term investors, while technical analysis is applied by short- and mid-term traders.

How risky are stocks?

As more and more people get to participate in the stock market, it is important to remember that stocks are considered risky investments. Speculation about particular companies, for example, can easily wipe out one’s cash. 

The PSE has also delisted some companies for mismanagement and fraud, leaving shareholders with shares they can no longer trade. It is a must to scrutinize companies before investing.

Moreover, buying shares once a company holds its initial public offering (IPO) does not necessarily guarantee gains.

For instance, the stock price of Medilines since its IPO in December 2021 has fallen by 70% as of September 20, 2022. Manny Villar’s AllDay has fallen by 48% since its November 2021 IPO.

But in the case of Leandro Leviste’s Solar Philippines Nueva Ecija, its stock price has gone up by 33% since its IPO in December 2021. (WATCH: The basics of investing in the stock market)

The Philippine equities industry has a value turnover of P2.23 trillion spread across 1.6 million stock market accounts as of December 2021. 

Majority of these traders are aged 18 to 44 and earning less than P500,000 per year. – Rappler.com

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