By Keren Concepcion G. Valmonte

THE PHILIPPINE Stock Exchange (PSE) is hoping at least P200 billion in capital will be raised at the stock market this year, as it seeks to encourage more small companies to list their shares.

“I hope that at least P200 billion of capital will be raised at the Philippine Stock Exchange,” Ramon S. Monzon, president and chief executive of the bourse operator, told BusinessWorld in a video call on Thursday.

If achieved, this would be nearly double the P104-billion capital raised at the PSE in 2020.

The pipeline for capital-raising activities is seen to be robust with companies like Monde Nissin Corp. and Del Monte Philippines, Inc. (DMPI) planning mega-initial public offerings (IPOs) and firms launching their own real estate investment trusts (REITs).

Capital-raising activities surged 116% to P41.6 billion at the end of March from P19.24 billion in the same period ending March 2020.

Mr. Monzon said there is a “sustained drive to get more listings,” as the PSE has the lowest number of listed companies in the Association of Southeast Asian Nations (ASEAN) region. There are currently 272 companies listed at the local bourse. 

To achieve this, the PSE 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 its capital stock to the public.

The PSE is proposing that BoI-registered companies with 20 or more investors or those qualified to be a publicly listed company will be required to list at the exchange and offer their shares to the public “in exchange for the incentives they’re trying to avail from the government,” such as tax exemptions. 

Mr. Monzon also said the PSE is collaborating with DTI, Financial Executives Institute of the Philippines (FINEX), and the US Agency for International Development (USAID) on the DELIVER (Delivering Effective Government for Competitiveness and Inclusive Growth) project, which helps with the capacity building of startups and small and medium enterprises (SMEs). 

Together with the DTI, the PSE is also planning to conduct listing education seminars for “high-growth sectors” and SMEs.

Mr. Monzon hopes that at least two or three SMEs will list on the stock exchange, especially after listing rules were eased. 

“SMEs need capital so that’s why we said we have to relax our rules so that the SMEs can go to the capital market to raise funds,” Mr. Monzon said. “I think they’re temporarily shut out of the credit market.”

The PSE has relaxed its requirements for listing at the SME board. It has also introduced guidelines for sponsoring, which allows those who cannot meet requirements to list through corporations or partnerships accredited by the exchange and registered with the Securities and Exchange Commission.

The PSE’s P200-billion capital-raising target will not include those raised by SMEs yet.

“We have these different programs for SMEs, [but] we don’t expect this to bear fruit really until next year,” Mr. Monzon said.

The PSE is organizing a virtual roundtable discussion today (May 25), where executives of listed companies will share stories from their successful IPO experiences.

Meanwhile, local retail investors are becoming more active in the stock market, as they accounted for 74.3% of stock market transactions in the first half.

Citing the PSE’s report to the Capital Market Development Council (CMDC), the Finance department said retail investors accounted for 43.3% of the volume traded by local investors in the January to March period. This is significantly higher than the 26.9% in 2020 and 18.2% in 2019.

A similar trend was observed in the fixed-income market after investor-related trading accounted for the bulk of the total traded volume last quarter.

Local investors have “stepped up,” Mr. Monzon was quoted as saying in a statement, lifting the average trading volume by 49.6% in the first three months from last year’s level. This helped offset the sharp drop in foreign participation to 25.7% of the total volume, against 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 almost a 50% increase in value turnover. Retail investors are very active in the stock market at least in the first quarter of 2021,” said Mr. Monzon, who noted many of the retail investors used their accumulated savings to buy stocks.

Finance Secretary Carlos G. Dominguez III, who chairs the CMDC, added that improved public trust and confidence on regulators also helped attract local investors.

“Let’s keep that in mind — the environment of confidence in the system. Regulators are so important to provide guarantees to investors and ensure them that they are not going to be cheated,” Mr. Dominguez said.

In the bond market, Philippine Dealing & Exchange Corp. (PDEx) President-CEO Antonino A. Nakpil noted reduced activities last quarter compared with the year-ago level. Mr. Nakpil noted that investor-related trading accounted for 59% or P898 billion of the P1.5-trillion total traded volume as of end-March.

Trading at the secondary market remained active despite the increase in bond yields, he said, after the benchmark 10-year Treasury bond rates increased 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 rolled out to make bonds more accessible to retail investors and various financial literacy campaigns also helped attract greater participation among small investors in the debt market.

Maiden issuances in corporate bond markets, however, were tepid with just P59 billion in new bond listings that quarter. Including the volume of maturing bonds, Mr. Nakpil said the outstanding amount of listed bonds dipped 1.36% to P1.45 trillion as of end-March, from the P1.47-trillion level last year.

“The increase in retail investors’ participation in the stock market is a phenomenon not only observed in the PSE, but almost in every other major stock exchange as well,” said Timson Securities, Inc. Trader Darren Blaine T. Pangan via Viber.

“With commuting time being freed up due to mobility restrictions, this may have spurred people to become more acquainted with trading and investing as part of the ways in which they can stay productive amid the ongoing COVID-19 situation across the globe,” Mr. Pangan added. — with Beatrice M. Laforga