Through Keren Concepcion G. Valmonte
THE PHILIPPINE STOCK EXCHANGE (PSE) hopes at least 200 billion pesos in capital will be raised on the stock exchange this year, as it seeks to encourage more small companies to list their shares.
“I hope at least 200 billion pesos in capital will be raised on the Philippine Stock Exchange,” said Ramon S. Monzon, president and CEO of the exchange operator. Business world during a video call Thursday.
If achieved, it would be almost double the 104 billion pesos capital raised at the PSE in 2020.
The pipeline of capital-raising activities is considered strong, with companies like Monde Nissin Corp. and Del Monte Philippines, Inc. (DMPI) planning mega initial public offerings (IPOs) and companies launching their own real estate investment trusts (REITs).
Capital-raising activities jumped 116% to 41.6 billion pesos at the end of March, compared to 19.24 billion pesos in the same period ending March 2020.
Mr Monzon said there was a “sustained effort to get more listings” as the PES has the fewest number of listed companies in the Association of Southeast Asian Nations region ( ASEAN). There are currently 272 companies listed on the local stock exchange.
To achieve this, the PES is working with the Department of Trade and Industry (DTI) and the Board of Investments (BoI) to amend the Omnibus Investments Code of 1987, which requires BoI-registered companies to sell at least 10 % of their capital. stock to the public.
The PSE proposes that BoI-registered companies with 20 or more investors or those qualifying to be a listed company be required to list on the stock exchange and offer their shares to the public “in exchange for the incentives they trying to take advantage of the government,” such as tax exemptions.
Mr. Monzon also said that the PES is collaborating with the DTI, the Financial Executives Institute of the Philippines (FINEX) and the United States Agency for International Development (USAID) on the DELIVER (Delivering Effective Government for Competitiveness and Inclusive Growth) project. , which helps build the capacity of startups and small and medium-sized enterprises (SMEs).
In collaboration with the DTI, the PSE also plans to organize SEO education seminars for “high growth sectors” and SMEs.
Mr. Monzon hopes that at least two or three SMEs will be listed on the stock exchange, especially after the relaxation of listing rules.
“SMEs need capital, which is why we said we needed to relax our rules so that SMEs can look to the capital market to raise funds,” Monzon said. “I think they are temporarily shut out of the credit market.”
The PES has relaxed its registration requirements for the SME council. It also introduced sponsorship guidelines, which allow those who cannot meet the requirements to sign up through companies or partnerships accredited by the exchange and registered with the Securities and Exchange Commission.
The PSE’s capital raising target of 200 billion pesos will not yet include those raised by SMEs.
“We have these different programs for SMEs, [but] we don’t expect that to really pay off until next year,” Monzon said.
The PES is hosting a virtual roundtable today (May 25), where executives of listed companies will share stories of their successful IPO experiences.
RETAIL INVESTORS
At the same time, local savers are becoming more active on the stock market since they carried out 74.3% of stock market transactions in the first half.
Citing the PES report to the Capital Market Development Council (CMDC), the finance department said that retail investors accounted for 43.3% of the volume traded by local investors during the January-March period. This figure is significantly higher than the 26.9% in 2020 and 18.2% in 2019.
A similar trend was seen in the fixed income market after investor-related transactions accounted for the bulk of total trading volume last quarter.
Local investors have “stepped up,” Monzon said in a statement, boosting average trading volume by 49.6% in the first three months from last year’s level. This helped to offset the sharp drop in foreign participation to 25.7% of total volume, compared to 45.4% in 2020 and 55.5% in 2019.
“Market liquidity is off to a good start. Trading in the first quarter remains robust. We have an increase of nearly 50% in turnover in value. Retail investors are very active in the stock market at least in the first quarter of 2021,” said Monzon, who noted that many retail investors were using their accumulated savings to buy stocks.
Finance Secretary Carlos G. Dominguez III, who chairs the CMDC, added that improved public confidence in regulators has also helped attract local investors.
“Let’s keep that in mind — the environment of trust in the system. Regulators are so important in providing assurances to investors and assuring them that they will not be cheated,” Dominguez said.
In the bond market, the Chairman and CEO of Philippine Dealing & Exchange Corp. (PDEx), Antonino A. Nakpil, noted a reduction in activity in the last quarter compared to the level of the previous year. Nakpil noted that investor-related transactions accounted for 59% or 898 billion pesos of the total trading volume of 1.5 trillion pesos at the end of March.
Secondary market trading remained active despite higher bond yields, he said, after benchmark 10-year Treasury yields rose to 4.5% in March from 3%. in January.
National Treasurer Rosalia V. de Leon, who is also a member of the interagency council, said measures put in place to make bonds more accessible to retail investors and various financial education campaigns have also helped attract greater participation of small investors in the debt market.
Initial issuance in corporate bond markets was tepid, however, with only P59 billion of new bond listings this quarter. Including the volume of maturing bonds, Nakpil said the stock of listed bonds fell 1.36% to 1.45 trillion pesos at the end of March, from the 1.47 trillion peso level. from last year.
“The increase in retail investor participation in the stock market is a phenomenon seen not only in the PSE, but also in almost all other major exchanges,” Timson Securities, Inc. trader Darren Blaine T. Pangan said via Viber.
“With travel time being freed up due to mobility restrictions, this may have prompted people to become more familiar with trade and investment as part of ways in which they can remain productive amid the situation. of COVID-19 across the world,” Pangan said. — with Beatrice M. Laforga