PSE targets P175-B capital in 2024, pushes reforms

The Philippine Stock Exchange (PSE) expects to raise P175 billion worth of capital in 2024 amid a more upbeat equities market with six companies seen to launch their initial public offerings (IPO) this year compared to just three in 2023.

“Our capital raising forecast is P175 billion, around P40 billion of which will come from IPOs,” said PSE President and CEO Ramon S. Monzon.

In 2023, a total of P140.95 billion of capital was raised through the bourse.

Monzon added that, “we are expecting six initial public offerings for the year, starting with the listing of Citicore Renewable Energy Corporation. Since no new REITs (real estate investment trusts) were added in 2023, we hope to see REIT IPOs make a comeback this year.”

Market observers and analysts also expect a more robust stock market this year.

“Some of these companies are those who have deferred their listing plans in 2023 due to poor market conditions,” said Abacus Securities Corporation, adding that, “with prospects of a better 2024 with potential rate cuts, there is increasing likelihood for a better market and for companies to conduct their IPOs.”

It noted that, “some of the names expected to push through are SM’s REIT listing, which is expected to be the biggest REIT, and the industrial REIT of the Cosco group.”

To further boost interest in the local stock market and avoid another sluggish trading environment as seen in 2023, Monzon said the PSE is pushing for regulatory reforms, increase the number of listed companies, and conduct an investor marketing campaign.

He said “the PSE is proactively collaborating with regulators and government entities to implement regulatory reforms aimed at fostering stock market investment.”

This includes the implementation of the Capital Markets Efficiency Promotion Act which will include the reduction of the stock transaction tax from 0.6 percent to 0.1 percent the reduction of the dividend tax to non-resident aliens from 25 percent to 10 percent to harmonize the cash and property dividend rate.

To increase the number of listed companies, Monzon said that, through PSE’s Listing Engagement & Assistance Program (LEAP), the Exchange offers invaluable support for prospective listing applicants by providing guidance through advisory and learning sessions, access to pre-listing assessment tools, and connections to experienced advisors. LEAP currently has 70 enrolled companies.

The PSE is also producing an educational video with a cinematic treatment that explores the motivations behind companies’ choices to pursue IPOs, their pre- and post-IPO experiences, and the pivotal role of IPOs in transforming their businesses.

The video is designed to attract and inspire other businesses to consider undertaking an IPO.

On the other hand, companies that lack the requisite track record but have demonstrated significant growth potential could also go public through a listing sponsor.

Meanwhile, the PSE will continue to partner with investment houses and government institutions to encourage IPOs through webinars and forums.

The PSE is also ramping up new initiatives to engage investors and has published the first edition of its weekly PSE Corner which contains stock market and listed company updates such as relevant corporate disclosures, latest earnings results, financial data, and dividend payments.

“We will also have a series of monthly (television) interviews to talk about the stock market investing and what our listed companies are doing.

“Presence in messenger apps will also be amplified by creating a PSE Viber community for stock market content and regular market updates.

“Finally, PSE will also reach out to our OFWs through various investor education programs to be conducted in coordination with the Department of Migrant Workers,” said Monzon.

He noted that, “the PSE‘s strategic priorities for 2024-2026 include expanding our product portfolio, improving market liquidity and pursuing new growth areas.”

To support these strategic priorities, initiatives to be launched in 2024 include a reduction in the Board Lot to as low as P100 so retail investors with a limited budget will have access to a wider range of stocks to invest in, increasing their overall participation in the market.

The PSE is also proposing to provide provisions that expressly allow Algorithmic Trading in the Revised Trading Rules. Such rules are pending regulatory approval.

It will also introduce VWAP Trading which is a tool that improves market transparency. Institutional investors can make use of VWAP trading to execute large orders to avoid artificially inflating the price of a security.

The PSE is also collaborating with ASEAN exchanges regarding depositary receipts (DR) with underlying foreign securities to enable cross-border trading. At the same time, DRs with Philippine underlying shares will also be issued in a counterpart exchange.

This exposes PSE-listed companies to foreign investors through depositary receipts which can potentially improve foreign participation in the market.

Monzon said the PSE also plans to form partnerships with more fintechs to enable stock trading in their applications.