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Common Stocks

Shares of stocks are units of ownership of a public corporation which can either be common or preferred. Investors holding common shares are typically entitled to vote on the selection of directors and other important matters as well as to receive dividends on their holdings. There are two types of common shares: Class A, which is limited to local investors; and Class B, which is open to local and foreign investors.

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Preferred Stocks

Preferred Stocks, also known as “preference shares”, are shares of ownership that gives the owner a higher claim on the assets and earnings of a company. A preferred stock is often referred to as a hybrid investment, because it offers characteristics of both a stock and a bond. Legally, it’s considered equity in a company, but it makes payouts like a bond, with regular cash distributions and fixed payment terms. Preferred stock occupies a middle ground between debt instruments and common stocks. Only after the interest on debt are paid can holders of a company’s preferred stock be paid. In turn, only after the preferred stock dividend is paid can the company pay dividends on its common stock.

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Warrants

A warrant is a derivative instrument which grants the holders the right but not the obligation to buy or sell a stated number of shares of stock at a specified price and at a specific time in the future. It is issued directly by the company which means that upon exercising the stock warrant, the investor will receive the shares that will fulfill that obligation directly from the company and not from another investor. Upon exercising a warrant, an investor is actually purchasing the underlying stock. As with stocks, an investor is issued a warrant certificate when they exercise a warrant which includes the terms, expiry date, and the final day it can be exercised. Having warrants does not give one immediate ownership of stocks.

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Dollar Denominated Securities

Dollar Denominated Securities are shares of stock listed, traded, and settled in USD. It can provide issuers with dollar-denominated requirements an opportunity to raise capital at the PSE without incurring foreign exchange risks while at the same time, reduce the currency risk exposure of foreign investors who trade PSE-listed securities. DDS also offers an alternative investment option for investors’ USD currency holdings.

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Exchange Traded Fund

An Exchange Traded Fund (ETF) is an open-end investment company that seeks to mirror the performance of an index. By definition, open-ended means that the ETF can create and redeem ETF shares continuously. It has features of a mutual fund, but is traded like a stock. Just like mutual funds, an ETF is made up of different shares of stocks. Unlike a mutual fund, it is traded like any stock listed in the Exchange, wherein the investor orders the ETF through his broker, pays for the stock on the third trading day and when the investor sells, he receives cash from the broker. ETFs follow the same board lot as listed companies. Since ETFs track the performance of an index, investors can have access to each of the component companies and diversify their investments at a price they can afford.

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Real Estate Investment Trust

A Real Estate Investment Trust (REIT) is a stock corporation established principally for the purpose of owning income-generating real estate assets such as apartment buildings, office buildings, medical facilities, hospitals, hotels, resorts, highways, warehouses, shopping centers, railroads, among others. It is a type of investment instrument that provides a return to investors derived from rental income of the underlying real estate asset. Returns are distributed to the investors in the form of dividends.

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Shariah

Shari’ah is the moral code and religious law of Islam covering the rules, regulations, teachings, and values that govern the lives of Muslims. It literally means "the way" or the path that leads to a certain intended place or goal. Shari’ah-compliant listed companies conform to the Shari’ah doctrine which results to principled, ethical and socially-responsible conduct and practices of Islam. Shari’ah investments are socially and morally responsible investments. The PSE’s list of Shari’ah compliant companies is updated quarterly. The screening is based on The Accounting and Auditing Organization of Islamic Financial Institutions (AAOIFI) Standards. The list of Shari’ah compliant companies provides Muslims another form of investment and conforms to the moral code and religious laws of Islam.

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Philippine Depositary Receipt

A Philippine Depositary Receipt or PDR is a security which grants the holder the right to the delivery or sale of the underlying share. A PDR consists of a deposit price and an option price, which is considered as payment when the buyer opts to convert said PDRs to a corporation’s share. PDRs are NOT evidences or statements nor certificates of ownership of a corporation. Each PDR represents an underlying share of a listed company, and when bought by a foreign investors, the PDR gives the owner the right to all the dividends due the underlying shares. Investors enjoy the economic benefits of the underlying shares without having a direct ownership in the company. PDRs allow companies with foreign ownership restrictions to raise funds from global investors.

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Common Stocks

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Preferred Stocks

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Warrants

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Dollar Denominated Securities

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Exchange Traded Fund

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Real Estate Investment Trust

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Shariah

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Philippine Depositary Receipt

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