Trading in the Stock Market

Disclaimer
This presentation is being issued solely for information purposes. This presentation does not contain all of the information
required by a party to evaluate the prospects of participating or utilizing the proposed financial products. Potential participants
must conduct their own investigations and analysis and rely on the results of such investigation in coming up with a decision to
participate in any of the proposed financial products. The data and information presented and included in this presentation do
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information contained in the presentation must be held in complete confidence.

Returns on stock investment

One can expect to benefit in various ways from investing in stocks.
Profit from a price rise (capital gain)
(Ex.) Mr. A bought 1,000 shares of Company Ds stock at 1,000 pesos.
The share price rose to 1,200 pesos within a few months, so he sold them.
(1,200 pesos 1,000 pesos) x 1,000 shares = 200,000 pesos.
Mr. A made 200,000 pesos of capital gains.

Dividends (income gain)

(Ex.) Mr. B bought 1,000 shares of Company Es stock at 1,000 pesos.
After settlement, the general shareholders meeting ended, and
Company E issued a 20 peso dividend.
20 pesos x 1,000 shares = 20,000 pesos
Mr. B made 20,000 pesos of income gains
(Note 1) Commissions, taxes, etc. are not taken into consideration
(Note 2) Stock prices will not necessarily rise.
(Note 3) One may not necessarily receive dividends..

Risk of stock investment

Risk is the potential to not obtain the expected return. Deviating from expected return
in other words, uncertainty is the true meaning of risk. All investment, not just equity
investment, follows the tenet risk = deviating from expected return.

(Conceptual diagram)

Return
high return

High risk, high return

(equity)

Low risk, low return

low

(cash and cash equivalents)

Fluctuation range of return

low risk high

Making money? Losing money?

Lets consider Mr. A and Mr. B, who both bought shares of "Company D".
Mr. A:
6,000 - 4,200 x 100 = 180,000 profit of 180,000 Php.
Mr. B:
3,900 - 4,200 x 100 = -30,000 loss of 30,000 Php.

[Example]
Day/month
8,350

Day/month
6,950

Mr. A and Mr. B

simultaneously bought
100 shares of "Company
D" at 4,200 pesos/share

Day/month
7,010

Day/month
6,130
Day/month
5,600

Day/month
5,430

Mr. sold his 100 shares

at 6,000 pesos/share

Day/month
4,200

Day/month
3,790

Mr. B sold his 100 shares

at 3,900 pesos/share
(Note) This is only a guideline. Please be aware that in reality a trading
commission and consumption tax on this, along with tax on profit will apply.

Stock Trading Terms

Lets learn the basics of stock trading terms.

Security name
Security symbol
Trading hours
OHLC (open, high, low, close)
Lot size, Tick size
Ask, Bid
Bull, Bear
Trading volume
Trade date, settlement date

Limit order
Day order, GTW
Dividend
Float
PSEi, Index etc.

(Note) This does not show all points of stock trading.

Daily trading hours

Actual intra-day trading prices are referred to in the following way.
(PSE: conceptual diagram)

Opening

High

Close of
morning
trading

Market Phases
Start of
afternoon
trading

Closing

Change in
share price

Close
Open

Change in
share price

Low
9:30
Market Open

9:00 a.m.

Pre-Open

9:30 a.m.

Market Open

12:00 n.n. Market Recess

1:30 p.m.

Market
Resume

3:15 p.m.

Pre-Close

3:20 p.m.

Run-off /
Trading At Last

3:30 p.m.

Market Close

12:00 13:30
Market Recess

15:30
Afternoon
Market Resumesession Market Close

OHLC
Open: first price traded that day

High: highest price traded that day

Close: last price traded that day

Low: lowest price traded that day

Security name and ticker symbol

Listed companies have a security name and ticker symbol (2-5 letters).

Symbol

TEL
Security Name
Philippine Long Distance
Telephone Company

Symbol

SMPH
Security Name
SM PRIME HOLDINGS, INC

4 elements of orders
Decide the following 4 conditions when placing a trade orders for stocks.

Name of security

Either buy or sell

Number of shares

How much (limit price)

(Note) In addition, please decide the expiration date (whether the order is valid only for today or by when you want to place the order).

Order Execution
Sell order

Trade executed

Buy order

Mr. B
Want to buy 1,000 shares of
Company D at 1,000 pesos/share

Trade not executed

Mr. A
Wants to sell 1,000 shares of
Company D at 1,000 pesos/share

Ms. C
Wants to buy 1,000 shares of
Company D at 990 pesos/share

Flow of stock trading

Flow of listed stock trading (conceptual diagram)
Trade Day + 3 Business Days
(T+3)
3rd normal business day, excluding
Saturday, Sunday, and holidays.

Order method Note 2

Specify:

Please deposit
funds in advance
before Buy order

Deposit
Funds

Security name
Intent to buy
Number of shares
Share price
Expiration date

Buy order

Fri

Sat

Sun

Sell order
Order method Note 2 (Note 4)
Specify:

Security name
Intent to sell
Number of shares
Share priceLimit price
Expiration date

Mon
1

Tue

Hol

Th
3

Payment
In principle, deposit
funds in your account by
the 4th business day,
including the trade date

(Note 1) One must open a BDO Nomura account prior to trading. A BDO account, identity verification documents, and signature are required when setting up an account.
(Note 2) Indicate details of order. A specified trading commission and taxes apply.