The capital market in the Philippines needs to be more innovative and inclusive to make it at par with other emerging economies in Asia, an official of BDO Capital and Investment Corp., a wholly-owned unit of BDO Unibank Inc., said.
BDO Capital and Investment Corp. president Eduardo Francisco said while the domestic capital market had significant developments over the years, it remained relatively small compared with its peers in the region.
He said in a span of five years, Philippine corporations raised over P1.7 trillion from around five to eight initial public offerings and 10 to 15 corporate bond deals a year.
Retail investors also stepped up especially for local equity and fixed-income deals and accounted for 50 percent to 70 percent of the volume, compared to previous years where institutions took up around 60 percent to 70 percent.
“Although the scenario has gotten better, the number of IPOs and bond issues in the country still pale in comparison to other emerging economies in the region. And while participation from retail investors
has increased, most of the investors are coming from the more affluent retail, leaving a huge untapped market such as the OFWs and the unbanked sector,” Francisco said.
He said the challenge was to make the local capital markets more inclusive, enabling the ordinary man on the street to invest in stocks and bonds.
Francisco said one of the solutions was not only to digitize but also to rid of too many touch points for IPO or bond subscriptions as these were roadblocks to encouraging many to invest in the capital markets.
He said subscribing to equities and bonds in the country was too cumbersome because of the numerous documents, forms and IDs required.
“Our Monetary Board, Securities and Exchange Commission, Philippine Stock Exchange are open to new ways to raise the number of investors and make it more available to the masses. We have seen them liberalize rules but we need to propose new products or solutions,” Francisco said.
He said the Philippines should also look into new platforms and models from other countries particularly innovative solutions to minimize documentation.
“Foreign players with platforms abroad are welcome to bring it here. Fintech solutions are also welcome and we can work with the regulators to get approvals,” he said.
BDO Capital is a full service investment house wholly-owned by BDO Unibank that provides securities underwriting and trading; loan syndication; financial advisory; and private placement of debt and equity.