Outlook for the stock market over the near to medium term period remains positive as the domestic economy is looking to sustain its upward momentum.
Analysts are expecting the economy to continue to grow at its current pace as sustained by continued inflow of dollar remittances from overseas filipinos, the strength of the business process outsourcing industry as well as improving infrastructure and expected influx of tourists in the country.
At the same time the local bourse has undertake steps to improve liquidity in the market by offering new products that will encourage local investors to participate in the market and lure companies to list with the PSE.
For this year, the PSE is looking to introduce three new products, namely the dollar-denominated trading, the PPP listing, and Personal Equity and Retirement Account (PERA).
With the DDT companies will be given opportunity to raise capital at the exchange without incurring foreign exchange risks. At the same time, the product can also minimize the currency risk exposure of foreign investors who trade PSE-listed securities.
Sicat believes that there is demand both from issuer perspective and from a funding perspective for this type of product.
Fruit canner Del Monte Pacific Limited earlier raised its intent to issue the first DDS in the first quarter.
For the PPP listing, PSE is giving companies that will be able to bag major infrastructure projects of the national government to raise funds through the stock market.
However there are several requirements, that the local bourse has before an applicant may qualify for listing. For instance an applicant company may qualify for listing if it has been awarded a contract under the PPP scheme of the government with project cost of not less than P5 billion.
At the same time an applicant company should first complete a phase of the project before it can apply for a PPP listing to protect investors from risks arising from delays in the PPP processes.
A company or concessionaire may raise funds from the capital market only when it is already realizing cash flow and revenues.
So far major conglomerates, like Ayala Corp., Metro Pacific Investments Corp. and San Miguel Corp., have won major PPP projects that the government has bid out.
For the recently, enacted PERA Law, the PSE is now working closely with the SEC to widen the “investible product list,” which details the allowable investments or security products where PERA account holders may invest in.
PSE chief operating office Roel Refran said the 30-company Philippine Stock Exchange Index will make a good batch of investible products for the voluntary retirement fund
Under Republic Act No. 9505, PERA is a voluntary saving scheme that serves as an individual’s fund pool that can also have 5 percent tax breaks aside from the investments made from the account.
For instance an employee may place as much as P100,000 a year in five PERA accounts at once. The cap in higher at P200,000 for overseas Filipino workers.
The account holder can then enjoy a 5mpercent tax credit that can be deducted in his or her annual tax liabilities.
The contributions will then be invested in various investors products such as trust funds, mutual funds, insurance, pre-need, government bonds and listed equities.
With these program, PSE is hoping the more investors will be encourage to invest in the stock market and at the same time improve the liquidity in the market.
As of end 2016, the size of the Philippine stock market in terms of market capitalisation stood at P14.44 trillion while daily average value turnover for the year came in at P7.81 billion.