Aug. 13, 2020 - CITISEC'S MULTI-MILLION PESO MISTAKE
A financial commentary on today's REIT PH debut
Today was easily one of the momentous days in the Philippine Stock Exchange. The Ayala Land Inc. decided they take stock trading in the country the next level by introducing the first ever Real Estate Investment Trust (REIT), the Ayala REIT (Stock code: AREIT). REITs have long been common to other countries' stock exchanges and they provide a prospect gain similar to common stocks but with the added bonus of providing compulsory dividends earned from real estate businesses, much like owning a condo, renting it out and earning profits from the rent.
So yes, it was attractive to long term traders like me, who consider my stock portfolio as something I'll just check back on after a few months. But the IPO (initial public offer) has many times proven itself in the past to be a good source of quick money since the volume of trades on listing date easily drives the price direction (MM ceiling on day 1, yes I'm talking about you, girl).
During the IPO period, Citisec Online or commonly known as COL Financial already declared there was a surplus of IPO requests from COL clients hence they did a lottery for who gets it. At only Php27 a share and at 100 shares per boardlot, some got half, a quarter or their full shares request. I got 100% of my requested shares only because I ordered only very few shares. 50% of my AREIT shares I got from PSE Easy and 50% from COL. Again, it was just very few stocks compared to other big time traders.
So here we are to Aug. 13, AREIT's official listing date. Today, LSIs or local small investors get the chance to own part of the AYALA grandiose without having to shell out millions. Everybody was revved up for stock market opening time this morning, except COL clients were greeted by the green highlighted link telling us to "give consent". Yeah sure, giving consent to trade was necessary but why on listing date only? And then shit started to happen.
COL and a few other online brokerage platforms couldn't place any trade for AREIT. All orders were rejected, repeatedly. Everyone was furious. What's worse is that the price was plummeting!
I sure chuckled when it reached 26.95 but I definitely was mourning at the sight of 24.90. That's 2.10 a piece that you either lost or can't average down because no buy or sell orders can be placed via the platform.
What's worse is that when COL released the statement below admitting they were not able to complete the NoCD (Name on Central Depository) requirements to PSE to be able to publicly trade AREIT in their platform, and tagging it as a "misunderstanding". I'm guessing COL and a few others made that mistake.
Surprising as to how a big company like Citisec who has been in the brokerage business for many decades shows us, on the first day of REIT in the PH, that they're capable of a technical mistake as costly as what transpired today. Assuming 20% of the LSI IPO request came from COL, assuming it's the biggest online platform in the country, I would peg the shares allocated to them to up to 9.3 million. So with loses up to 2.10 per share, the veteran brokerage company just made a 18.6MPhp mistake for not properly filing the NoCD.
So here we are, with a broker who decides our fate for us: to stay a long term investor. I'm a bit frustrated for the likelihood of higher dividends at a lesser price of 24.90 and also because I wasn't able to enjoy the IPO hype (everyone was either sad or angry during trading hours today and thereafter).
We lose some but we learn some more. Broker could eff up but you have full control over your finances. You can choose to buy a new flashy phone to flaunt, or you could stack up on some publicly listed shares on the stock exchange. Again, you don't have to be an expert trader because there's always a choice of long term investing. There's also no need to cry over today's two-peso loss because risks should have been understood already long before one has opened a stock exchange account.
I just hope this wasn't a mafia, daylight robbery thing or this could end up as a really cool movie or a class-action lawsuit 😂😂😂