Why the Philippines only have 200+ Public Companies?

A foreign investor asked me, “Why the Philippines only have 200 or so public companies?”. He has asked a lot of people but seems not convinced in the matter. I have never thought about why. But its an interesting question. I did reply to him on the top of my head but thinking about it more, I think there are many reasons for why the Philippine stock market is small compared to other neighboring countries.

For example, Vietnam has 98 million people, 2500+ public companies listed in their stock market. The Philippines have 108 million people with 269 public companies. Why is that?

Financially Illiterate

Let me start off with the Filipino citizens. Filipinos are financially illiterate. 77% of Filipinos don’t have a bank account (source CNN PH). Only 1% of the population invests in the stock market. This is the first reason, if there’s only a few handful of people who are willing to spend their money to invest in businesses, businesses don’t see it worth the effort to do IPO.

Red Tape and Corruption

With the corruption and red tape in government agencies, there’s a lot of Filipinos who are discouraged to pursue business. One conversation that I heard between my father-in-law and his businessman brother that he wished he just became an employee, less headaches. It might be a joke or just trying to make my father-in-law feel better but there’s truth in that. Its hard to do business in the Philippines.

The government is trying its best to make it easier and getting rid of corruption. But I wonder how far it will go.

Filipinos are not Entrepreneurial

There are Filipinos who made great names in the business world. But if you will notice, the top business people in the country have foreign ancestry and they are minorities. Most of the native Filipinos, dream of working abroad or migrating to other countries. Rarely would they want to be a business owner.

The PSE’s Lax Action Against Illegal Activities

I still remember Calata. The profitable venture of insider trading. With 2 million peso fine for a 100 million worth of violation? No jail time. And it took 30+ violations before they got the stock delisted and its founder banned from taking any board seats. May I remind you, there’s no jail time? And investors losing money without a tender offer.

I don’t have proof, but I believe that there’s rampant insider trading happening in the Philippines. How would a stock go up 3 days before an earnings report? Only on the day of the earnings report shall the disclosures would reveal that the insiders have already bought just before any news came out. Same goes for the selling part. The stock would go down, curious what is happening. Revealing 3 days later that there’s bad news and revealing insiders already unloaded their shares.

Putting it all together

So if you put this together it goes like this, Filipinos would rather work abroad because its harder to do business. These same people, even earning more than average, are financially illiterate to use their money for investing in stocks, therefore businesses have no reason to list their companies because there’s not much investors, they would rather sell privately. Then businesses and investors don’t trust the PSE because of their lax rules and actions against illegal activities.

If I have access to foreign markets like the US, where the penalty are harsh for illegal activities, why would I invest my money in the PH?

So am I suggesting not to invest in the Philippines?

No. I’m saying just be careful. The reasons why the Philippine stock market is small is the same reason why its good. Less competition, less educated competitors, and you’ll be first one in, when these unbanked people started investing. And if you follow the rules of value investing, you’ll be able to avoid bad companies.


  1. Not exactly a competition when these “less educated competitors” invest in the stock market. More domestic investors would benefit everyone.

    With just 10% of their income, Filipinos could infuse around 1.5 Trillion pesos into the economy, yearly. That amount would elevate stock prices and companies would be encouraged to list their stocks. Soon enough, the Philippine Stock Exchange would be catering thousands of companies.

    More companies means more choices for the value investor.

  2. I had the same question before! And yup, I still remember CALATA and now, it reminds me of NOW on certain degrees but I hope I’m wrong! (FB disclosures,lol)

    I agree in all points. Lastly, Filipinos loves easy money. They love LOTTO and the emergence of those SCAMS is no accident.

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