* This is my article in
BusinessWorld yesterday, March 25, 2019.
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.
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