BPI whips up cocktail of stocks and bonds for retail investors

MANILA, Philippines—The Philippine stock market has been suffering from bipolar disorder. Since the start of the year, the mood pendulum has swung from one extreme of successive record highs to the other marked by frantic fund withdrawals that erased this year’s considerable gains. There was a time not so long ago when such wild swings in the stock market’s performance would have caused Filipino investors to rush to their bank or fund manager and convert their investments into cold cash they can hide under their pillow. But local investors have matured greatly since the global financial turmoil precipitated by the US subprime crisis in 2008. Local markets are jittery but calm, and investments in moderate-to-high-risk investments such as stocks and bonds have remained largely intact. This can be attributed in part to the great strides that leading banks and financial institutions such as the Bank of Philippine Islands, the country’s oldest bank, have taken over the past few years to improve the financial literacy of Filipinos and open their minds to a wide range of investment possibilities. Having record low interest on savings and time deposits of around 1 percent has also spurred great interest in financial instruments other than traditional bank deposits. The yield is just too low and not enough to even at least beat inflation, or the annual rise in the prices of basic commodities. BPI is taking advantage of this heightened interest in investments by aggressively going after retail clients—those with investable funds of at least P10,000. Prior to 2005, when BPI made that strategic shift to go after the retail market in a big way, the bank catered almost exclusively to large corporate accounts numbering just over 1,000 clients with at least P5 million to invest in a wide array of instruments including