1.

Please explain why the Philippine Stock Exchange Market are perceived as long-term
investment compared to other world markets. Please cite an example. 10 pts

Philippine Stock Exchange Market is fairly new compare to world renowned New York Stock
Exchange. PSE is rather small and still expanding to many businesses and its corporations’ listings. The
companies listed in PSE is rather small and risky for short term trading. It bears a very volatile market
and doesn’t have a solid market index. When it is compared to NYSE, NYSE has a solid market index line
up like DOW JONES or the S&P 500 which is known to be the best performing stocks in the world
market. This market indexes are good for short term trading and long-term trading for it has a
reputation of bringing profits and stable financial systems. Unlike the PSE Composite Index which only
boast 30 companies, meaning that there is a high risk involved in the index for it is only diversified to 30
companies. In the long run though, PSE listed companies tend to slowly grow thanks to a developing
economy of the Philippines. Companies in the Philippines are locally competitive but internationally
inconsistent. This makes the company more dependent on the political atmosphere of the country. One
does not predict the outcome of legislations and political situation in the Philippines so its more likely a
bet or long-term investment on how things turns out in the end. Situations like the ABS-CBN where its
franchise was denied and making its operations limited. This has had a huge impact on its stock price
from P15 on January 1, 2020 to a P12 on November 25, 2020. This trend of stock prices mark down can
be traced to a political intervene by the National Government of the Philippines. But on the long-term
ABS-CBN can still gain mark-up on their stocks depending on the political atmosphere and the election
outcome coming this 2022 where it may have a shot at getting its franchise and continue business as
usual.