Fund-raising activities at the Philippine Stock Exchange are expected to reach P150 billion in 2020, up 57.5 percent from P95.22 billion this year, according to a top official of the local bourse.
PSE president and chief executive officer Ramon Monzon said in an interview Thursday the company would see more active fund-raising activities in the local stock market in 2020 as the exchange with the plan to launch two new products, namely the Real Estate Investment Trust and short selling.
Monzon said the exchange was also banking on the initial public offerings of at least four to six companies, the conduct of rights offering and sale of preferred shares offering to finance expansion projects.
Monzon, however, conceded that many companies, especially banks, would opt to go to the bond and debt market because of the low interest rate environment.
“In 2019, all banks went to bond financing after the Bangko Sentral ng Pilipinas relaxed rules on bond financing plus interest rates are very low. So if you are company, it is cheaper to raise debt capital than equity capital,” Monzon said.
Only four companies conducted IPOs in 2019, namely Kepwealth Property Philippines Inc., Axelum Resources Corp., AllHome Corp. and Fruitas Holdings Inc.
Meanwhile, after years of delay, the PSE expects real estate investment trusts and short-selling to take off the ground this year, widening the range of product offerings to attract foreign investors.
REIT gives investors the option to invest directly in the finished products that are already earning money—such as residential and office units, hotels or shopping malls or even infrastructure ventures, like toll roads and power plants—and not just the property developer itself.
REIT aims to attract investors after the law required the distribution of 90 percent of income yearly.
The Securities and Exchange Commission is set release the final rules of REIT early next year.
Short selling enables investors to hedge risk by borrowing shares from a lender and sell them, betting on a price drop to make profits. It is expected to boost liquidity in the stock market.