Mabuhay Filipino Thinkers!
Be inspired with UTrade’s CEO, Mr. Leonardo Roxas Arguelles Jr. as he shares his knowledge and words of wisdom for people who wants to excel in life and handle their finances well. Stock market has always been unfamiliar with Filipinos, according to Mr. Arguelles, now is the time to invest!
“My only inspiration is to make every Juan de la Cruz become somebody. And the stock market is the venue that will make them rich legitimately.”
Leonardo Roxas Arguelles Jr.
Managing Director, Unicapital Inc.
President & CEO Unicapital Securities Inc.
Managing Director, Equity Capital Markets
© Manila Bulletin 2015
Stock Trading Made Easier
“My only inspiration is to make every Juan de la Cruz become somebody and the stock market is the venue that will make them become rich legitimately.”
Leonardo Roxas Arguelles, Jr.
Managing Director, Unicapital Inc.
President and CEO, Unicapital Securities Inc.
Managing Director, Equity Capital Markets, Unicapital Inc.
Leonardo Roxas Arguelles, Jr. has a dream for every Juan de la Cruz to be able to partake in the empowering world of stock market. He opened an opportunity for them to trade and become millionaires, too, because the stock market is not only for the big time, but for the small time as well.
Despite his innovative ideas at wealth creation, Arguelles remains grounded. He sticks to the basics and what is essential. His traditional belief debunks all that the youth considers ideal nowadays, but he is one lovely voice against a mass of new thinkers.
Unicapital Securities Inc. (USI) started commercial operation in July 1997, a fateful date in the history of global finance. The Asian financial crisis struck that year and that did not spare the newly-established corporation. The original team already recommended to throw in the towel because it was near bankruptcy.
Unicapital Securities Inc. is the securities trading/stock brokerage arm of Unicapital Group which does investment banking and financing (corporate loans). USI was highly capitalized of over P100 million and the crisis had eaten up 90 percent of the capitalization because of the high overhead cost.
At that time Arguelles was freelancing doing some consultancy jobs after working full time for 13 years as an investment banker. Jimmy Martirez, USI owner and friend if Arguelles, asked him to assess the company’s situation.
Armed with a vast experience in investment banking, Arguelles had been exposed to a broad range of investment banking and financial advisory transactions, ranging from IPO’s, Mergers & Acquisitions, Private Equity Investments as well as Project Finance.
“So I looked at it and gave my two cents’ worth of recommendation which was to continue its operation, not to close it,” recalls Arguelles.
Arguelles has the foresight on the future need, potential and impact of closing USI, which is majority-controlled subsidiary of Unicapital Inc., an investment house.
“Unicapital Securities really serves a specific purpose. It is like a third leg because the investment bank is into fixed income trading and investment banking. We need Unicapital Securities to distribute the securities of clients for their future IPO’s,” says Arguelles.
Thus, Arguelles argued, closure of the securities firm “will have a dent of reputation of the mother company, which is an investment bank.” The Unicapital Group is under Majalco Inc. which has stakes in Malayan Bank (aside from Unicapital). One major shareholder of Majalco, Inc. is GMA7.
Impressed with his recommendation and foresight, Martirez entrusted to Arguelles the future of the subsidiary firm.
IN THE BLACK
“So, it was my second wind so to speak because the firm was close to bankruptcy and today we’re in the black,” declares Arguelles. In fact, Unicapital Securities has been in the black for the past four years.
To put the company to where it is today requires a lot of hard work on the part of Arguelles, who implemented cost cutting measures. Arguelles also brought in his own team of former PNB officials.
“Slowly, but surely we were bringing it back. We are now in the pink of health.” Adds Arguelles.
Unicapital Securities now ranked 31 out of 134 securities firms in the country. It hopes to be in the top 25 within the year.
In the last two years alone, with Arguelles at the helm, USI successfully completed, as underwriter, four IPO’s for listing in the Philippine Stock Exchange.
What brought Unicapital Securities to its current financial status is not only prudence in its finances. Arguelles has made it a point that for the company to move forward, it has to make a conscious effort to compete.
“Moving forward is the way to compete,” stresses Arguelles.
And that way forward is to go online trading. The advent of the internet has made doing business a lot easier. It has to be present in a big way in that segment while it is still hot.
“There is a huge potential, but we are a newcomer in that blue ocean,” says Arguelles.
To make an impact, Unicapital Securities also made a decisive move to focus on the small investors, new players, young professionals and entrepreneurs.
And so UTrade was launched, the company’s online stock trading platform. It is still small considering they are just starting and focusing on the small investors. It envisions to empower the masses. True to its mission to make online stock trading accessible to the masses, UTrade was first launch in Cebu.
“Cebu is the seedbed of the entrepreneurial spirit,” says Arguelles citing that most of the country’s big taipans started from Cebu. All the fast moving consumer goods are being launched in Cebu, as well.
Because the target is the SME sector, it is easier to track them down and follow in a smaller place city like Cebu.
UTrade has built a reputation as the first online stock trading company that set up shop in the country’s second largest city.
Already, 35 percent of company’s clients are from Cebu and market has grown over a thousand percent increase. It’s competitors have long been in the business for the past 15 years with over 100,000 clients.
Arguelles noted what is really driving growth in stock market investments is the good and strong fundamentals of the domestic economy.
“We are riding on this strong economic momentum,” says Arguelles citing the growing GDP and the per capita income which is nearing $3,000 putting the Philippine economy as a very attractive business proposition. This is the reason of the robust motor vehicle sales in the country. But wait till the per capita income reaches $5,000 level.
For instance, the HSBC has rosy projection for the Philippines, which is now ranked among 16 fastest growing economies in the world. Economist Bernie Villegas has predicted of the Philippines and the Filipinos becoming very rich by 2030.
“I am a believer because we have the demographic dividend,”he adds.
“Just invest your money in the stock market and let it sleep,”says Arguelles. He would then recall that in 1983, the Philippines was almost bankrupt following the assassination of Sen. Benigno “Ninoy” Aquino.
“I saw the dark days of our economy where importers have to pay in cash because our dept cannot be honored. We were placed under the IMF program, but now we are an IMF creditor,” adds Arguelles.
“We are growing second best only to China, and our reforms are going to sustain our growth,” he adds.
Another factor that is pushing the economy to new heights is the huge dollar inflows from the more sophisticated OFW’s, who are contributing $25 billion annual remittances. The BPO sector is also an added advantage.
With the government huge spending for infrastructure development that is expected to contribute 5 percent of GDP from the current 2.5 percent, this will further cement economic growth, he adds.
As the economy grows so is consumption of the more than 100 million Filipinos. And as the Filipinos become more empowered, they will have enough capability and capacity to invest for their future.
All these factors have come into force because of the Aquino government’s “Daang Matuwid” policy. With the reforms being institutionalized by the Aquino administration, Arguelles is certain the Philippine economic growth is sustainable.
Unicapital invested in technology to power its online stock trading system. It is using the Technistock platform. It has attracted the more internet savvy young investors.
For instance, 85 percent of its investors are between 21-45 years old. But Arguelles always want the young investors to be driven by the right fundamentals and not be drawn by impulse.
“Some kids feel that money is everything, they want quick fix. But we want them to be conservative so our advisers give them sound advice. We can’t suggest to them the speculative issues,” says Arguelles.
“Stock market is not gambling, it is serious investments,” says Arguelles stressing it is just like putting money in particular business.
His advice, especially for SME’s, and the young and new investors is to study the company that they are interested investing into.
“Study the company, it’s people, and the executives working in that company, why are people attracted to this company,”he adds. He is against investing in a particular issue because somebody gives you a tip. That is not reliable because, that is only hearsay.
Unicapital Securities has also been very innovative to ensure that even the small players can partake into. For as low as P5,000, you can already open an account and start trading in the stock market on an installment basis.
“We even have P1,000 start up or even P500 initial investments through a savings plan,” he adds.
“In our case, everybody is somebody,” says Arguelles. Through the online stock trading, more investors are given a fair share of the stock market boom. Investors are earning at least 14 percent of their investments a lot better than the banks, which give you one percent interest only on savings.
“My only inspiration is to make every Juan dela Cruz becomes somebody. And the stock market is the venue that will make everybody become rich legitimately,” he adds noting that all earnings at the stock market need not be reported to the BIR anymore because the one and a half percent capital gains tax has been paid already when you sell.
“That’s the best because when you go to a bank, there is a final withholding tax of 20 percent. In the stock market, you earn also dividends. PLDT alone gives an annual dividend of 6 percent, you don’t get that from a bank,” points out Arguelles.
He noted that a lot of people in the US have become rich because Americans are investing at tech companies in Silicon Valley.
“They became millionaires because of the stock market,”says Arguelles, who finished a degree on economics from the Ateneo de Manila University.
“The secret to wealth creation is to invest smartly,” says Arguelles.
Be Careful. This is Arguelles foremost advice to most investors especially the neophyte small investors.
“Know what you are getting into,” says Arguelles noting that an investor will never go wrong in investing in a solid blue-chip company.
“Look at the company’s earnings because the stock market is earnings driven,” adds Arguelles, who also wants investors to study a company’s evolution. How it has grown over years, like the famous story of the country’s largest fast food chain Jollibee.
Look at the top companies that have grown their income by a minimum of 15 percent because they have better prospects of higher returns. But there are even companies that have grown 30 percent or even more.
“Look at the company’s track record and good earnings potential because investments should be long term-oriented,” adds.
“Choose your CEO and just ride on him instead of you running the company because it is all about good management. Investing in a good CEO is no rocket science. Filipinos are fond of betting at horse racing, they choose their jockey and the horse, if we only apply that same approach then we are doing right, that is a sure hit at the stock market. That should be our paradigm,” says Arguelles.
“Instead of running the company yourself,” he says, “just choose the CEO that you like and invest in the company that he is running.”
“Imagine you have the Zobels and Injap working for you,”adds Arguelles. The Zobels runs the country’s largest conglomerate Ayala Corp. while Injap is smart entrepreneur Edgar “Injap” Sia, the founder of Mang Inasal and DoubleDragon, which plans to build 100 community malls around the country.
“Stay away from the speculative stocks because they are not liquid companies,” he adds.
According to Arguelles, the stock market is where an ordinary investor can accumulate money. When the right time comes, sell it to buy hard assets like real estates.
When something happens at the stock market, Arguelles says, “Be patient, don’t panic, keep cool.”
“Panic time is the best time to buy stocks when there is blood in the street,” adds Arguelles, who loves photography and hopes one day he can find time to blog about his photos.
The other rule is to keep 20 percent of savings of your income. That savings should go to investments. While most people keep their money in the bank, Arguelles doesn’t.
“I don’t put my money in the bank,” he admits. Instead, he invests in blue-chip issues making him sleep more soundly at night.
To Arguelles, long term stock market investment is 10 years maximum and minimum of 5.
“Look at the 20 to 30 year horizon where the economy is a lot brighter,” he adds. With all the money being parked at the central bank now being freed up, most of these will go to the stock market.
Arguelles, however, cautioned people against borrowing money just to invest in the stock market. Never use credit card to leverage purchase.
Arguelles also claims he has no bank account, just current account. He invests in the stock market. If he needs dollars for trips abroad, he buys it.
Arguelles, who studied Advanced Management Program of the University of Asia and the Pacific (UA&P) in cooperation of the IESE Business School of Barcelona, Spain, has noted of one Filipino trait that is hindering its growth.
“The problem with Filipinos is they always compare themselves with others. They have the tendency to look more to their sides rather than looking straight ahead. By doing that, one loses a lot of concentration,” adds Arguelles.
“If only people put focus on what they do instead of what others are doing, they would have been more productive,” he adds.
He even said that putting blinders, like the ones for horses, might help people concentrate and ensure they only look ahead and not into other directions.
“Don’t even look at your co-employees, you will only envy them,” says Arguelles, adding that the problem with Filipinos is that they tend to always look sideways and to always compare themselves with their neighbors. “Don’t overspend, live frugally,” says Arguelles.
“As long as you put your heart in what you’re doing, you’ll make it. It means falling in love with your wife and of course, trust in the Lord,” adds Arguelles.
Despite a privileged life, Arguelles said one should be detached from money because other people become so scared of the prospect of becoming poor because they don’t experience hardship at all. People who are born rich have difficulties adjusting to new situations because they are attached to wealth.
But Arguelles said that if you are poor there is no way but up.
“At the stock market, Arguelles said, one cannot be greedy, be content,” says Arguelles, who gives it up when he has earned from a certain stock, but others are just too greedy, and in the end loses it.
Arguelles, a certified Strategic Business Economics course program from the University of Asia and Pacific, has even a conservative take on the current thinking of the new generation.
( Continuation at : https://www.utradetalk.com/my-only-inspiration-is-to-make-every-juan-de-la-cruz-become-somebody/ )
Edwardo Miguel Guevarra Roldan
Isang Samahan, Isang Pilipinas (ISIP) and Think Philippines!
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