MANILA, Philippines – It’s easy to assume that when you tap “buy” on your trading app, you’re directly funding the company behind the ticker. In most cases, you’re not.

A normal stock market trade is a secondary transaction. That simply means you are buying shares from someone who already owns them. Say you want to buy some shares of Ayala Corporation (AC). When you buy their stock, Ayala is not selling you anything at that moment, and it is not receiving your money from that trade.

So who gets your money? The seller does.

And you’re not buying from a specific person you can name. Stocks are fungible, meaning one Ayala share is identical to another Ayala share of the same class. Trading also moves far too fast for buyers and sellers to negotiate directly.

Instead, the Philippine Stock Exchange (PSE) acts basically like a giant matchmaker. It matches buyers and sellers, your broker routes the order, and the shares are transferred to you through the market’s clearing and settlement plumbing.

That seller can be a retail investor taking profits, a fund rebalancing its portfolio, a foreign investor exiting the Philippines, or even an employee who received shares as compensation and now wants cash. Sometimes the reason is boring. Maybe they need money for tuition, a house down payment, or a business. Sometimes it is strategic — they think the price is high, or they want to rotate into another stock. Whatever the reason, the point is they hit the sell button and you hit buy, and your prices match.

And yes, a stock really is changing hands. You are not buying a “claim token” that the company manufactures on demand. You are buying an ownership slice that already exists, and your trade is a transfer of that slice from one owner to another.

This is why it is possible for millions, even billions, of pesos worth of Ayala shares to trade in a day without AC receiving a single peso of fresh capital from those trades. The trading activity affects AC’s share price, but it does not directly refill its corporate bank account.

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When does a company get money from the market?

The time your money can truly go to the company is when the company sells new shares to the public. The best-known version is the initial public offering (IPO), when a private company lists on a stock exchange for the first time. [Finterest] GCash, Maya IPOs in 2026? What this means for potential investors

Why would a private company go public? Usually for some mix of these reasons: to raise large-scale capital for expansion, to pay down debt, to fund new projects, to use its stock as a form of acquisition payment, and to give early investors a path to eventually cash out. Going public also forces more disclosure and scrutiny, which can be a feature, not just a burden, if the company wants credibility with lenders and partners.

Even if the IPO process is long and complicated, the part that most directly determines how much money the company actually raises is the offer price. You might be wondering, wouldn’t the company want to maximize the price, since it only gets to sell shares to the public once?

In practice, companies do want a strong valuation, but they also want a successful offering with stable trading afterward. If the IPO is priced too high, it can flop on listing day, put a bad taste in the mouth of investors, and make future capital raising harder. There is also a relationship aspect. Underwriters want repeat investors to feel they were treated fairly, not squeezed. That is one reason IPOs are sometimes priced with a bit of breathing room so the stock can trade well after listing.

Many IPOs are also a mix of primary shares (new shares sold by the company) and secondary shares (existing shares sold by current owners). Only the primary portion raises fresh money for the company.

For example, Converge’s IPO structure shows that it planned to sell both primary and secondary shares, with the overall deal size potentially reaching over P40 billion with the overallotment option. In other words, some of the IPO money could go to Converge itself, while some could go to shareholders selling down.

And IPOs can raise big bucks too. Just consider the record-breaking Monde Nissin 2021 IPO that raised about P48.6 billion, and, more recently, Maynilad’s 2025 IPO, which was priced to raise up to about P34 billion in gross proceeds.

And the IPO is not the only time a listed company can raise equity capital. Companies can do follow-on offerings, stock rights offerings, or other share issuances later. For instance, San Miguel Corporation (SMC), which had its IPO way back in the 1940s, completed a follow-on offering of preferred securities in October 2025 that the PSE said raised P30 billion, with proceeds earmarked largely for refinancing and for investments tied to infrastructure projects. [Vantage Point] San Miguel’s profit surge — and the market’s skepticism

SMC can only pull off a successful follow-on offering because of the continued strength of its stock in the market. In other words, even if your day-to-day stock purchases are just secondary trades, they still matter to the company indirectly. A liquid, well-priced stock gives a company a stronger reputation, a potentially lower cost of raising capital later, and a cleaner path to do future share sales when it actually needs funds. – Rappler.com

Lance Spencer Yu is a former business journalist for Rappler. He later worked as a private capital analyst at MSCI, working directly with sovereign wealth funds, pension funds, and family offices across the Asia-Pacific region. He now serves as an investment and strategy analyst at Dedale Intelligence, producing in-depth, actionable research for private equity funds and institutional investors.

Finterest is Rappler’s series that demystifies the world of money and gives practical advice on managing your personal finances.