Philippines stock exchange bets on new products -IFR
HONG KONG - New trading products, better corporate governance and improved tax rules will help alter the perception that the Philippines Stock Exchange is a small, illiquid choice among South-East Asia’s markets, its president Hans Sicat said.
"In the past, the Philippine market was viewed as an old boy’s club, but that is changing. Today, deals of the size of $1 billion can be easily done," Sicat told IFR, a Thomson Reuters publication, in a telephone interview.
The market had been on a roll in the last two years as the economy has improved and the country achieved investment-grade status, yet much more was required from both regulators and issuers for Philippines to continue to attract capital, he said.
Average daily traded volume on the exchange rose to P10.6 billion ($240 million) in 2013 from P5.5 billion in 2011, after the Philippines strictly implemented the minimum 10 percent freefloat rule for listed companies in 2012. The market’s capitalization rose 18 to 20 percent, Sicat said.
There is also more participation from domestic investors. Foreigners were responsible for nearly 65 percent of average daily traded volume 10 years ago, while trading volume now was split equally between local and foreign investors, he noted.
The decision of the three major rating agencies to boost the Philippines to investment grade last year had helped as it "has opened the doors for many funds, which don’t invest in non-investment-grade paper," Sicat said.
Despite the rising volumes, the Philippines remains the "baby" market among the big five ASEAN economies. Sicat said there were hopes that more family-owned companies would break their reliance on bank borrowings and consider the exchange.
The PSE president said more non-conglomerate companies, such as D&L Industries, DoubleDragon Properties and Century Pacific, had listed, setting an example for other owners.
"These [newly listed companies] are run by bright, young people, who are a lot more sophisticated," Sicat said.
The PSE is also encouraging firms in capital-intensive growth sectors, such as renewable energy and oil companies, to list under new rules, which exempt them from the usual three-year profit record.
Dual listings by foreign companies was another way for the PSE to boost the market’s breadth, Sicat said, adding that some Chinese companies had shown interest in listing in the Philippines.
Some companies with mining interests in the Philippines and shares trading on the Toronto, Sydney and London stock exchanges, are interested in listing on the PSE, Sicat added. Last year, fruit producer Del Monte Pacific became the first Singapore-listed company to achieve a dual listing on the PSE.