More stock market development

Continuing the Market-Oriented Reforms for Efficiency (MORE) series in this column, we look at one of the important indicators of an economy’s attractiveness to private business, entrepreneurship and job creation, the stock market.
Unlike foreign direct investments (FDI) which are long-term and, hence, require lots of basic soft and hard infrastructure, portfolio and stocks investments are often short-term, with investors buying today and selling after a month, or a week, or within hours. Thus, the stock market reflects the long- and short-term business sentiments.
The Philippines stock market has experienced good expansion in the previous decade, and further expanded until 2015. It has tanked though at the end of 2016 during the Duterte administration, grew in 2017, but declined again early this year.
Thailand and Indonesia have started at similar levels with the Philippines in 2000 and, since then, have expanded much faster and are twice that of the Philippines today. Vietnam started late but has shown consistent increases. One reason for this is that the Philippines has a small number of listed companies, only 267 (see table).

Taiwan is not included in the WB report but it is listed in the WFE, it has market capitalization of $1,118.3 B in February 2019 from 1,716 listed companies.
China is wobbling from the ongoing trade dispute with the US and many domestic problems are surfacing today, like huge debts by the corporate sector, state-owned enterprises and local governments.
The Philippines needs to attract more companies to be publicly listed. This will invite more individual and corporate investors and help expand market capitalization. I am not aware of the major reasons why there is low participation by corporations in the local stock market. Could it be the huge minimum capitalization required, big and voluminous SEC requirements, BIR alert of more taxes if companies are listed? Or cultural, companies would rather remain “low key” to preserve their clan-dominated corporate structure and investment?
Hope that such hurdles will be addressed soon. In particular, the DOF-BIR should not be too tax-hungry that they can scare many companies to be more publicly transparent.

There are two forums on the stock market this week. First is the “BusinessWorld Stockmarket Roundtable 2019” on March 25 at Conrad Hotel. The four speakers are Roel Arco Refran, COO of the Philippine Stock Exchange, Michael “Mike” Gerard Enriquez, Chief Investment Officer of Sunlife Financial, Justino “Jun” Calaycay, Jr., Head of Research and Engagement Department of Philstocks Financial, and Marvin Fausto, Business Development Consultant of COL Financial.
Second event is the “Breakfast and Market Update” at the PSE on March 29, exclusive for members of the UP School of Economics Alumni Association. It is co-organized by Hans Sicat, former PSE president and a school alumni.
Last year, the “BusinessWorld Stockmarket Roundtable 2018” was held in February at Makati Shangrila Hotel. The four speakers were Augusto “Gus” Cosio Jr. of First Metro Asset Management, April Lynn Tan of COL Financial Group, Jun Calaycay, Jr. of Philstocks, and Mike Gerard Enriquez of Sunlife.
 
Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers
minimalgovernment@gmail.com