Philippine bourse Asia’s most vibrant

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PHILIPPINES-STOCKS
Filipinos take trading serious: Holy mass at the PSE

Trade volume at the Philippine Stock Exchange (PSE) grew 33 per cent in 2012, making it the fastest growing bourse in Asia marked from when its steadfast rally began in 2010 (38.4 per cent), President and CEO Hans Sicat of the PSE said on February 27 at the Asia CEO Forum in Taguig, Metro Manila.

By domestic market capitalisation, the PSE grew over 25 per cent in 2012, the second fastest in Asia behind Thailand, and the third fastest in the world behind Turkey.

A highly capitalised banking sector, strong demand for residential and commercial property and a BPO sector that has injected nouveau wealth in Filipino households has aided the doubling of the value of the exchange in just 18 months, with the bourse rocketing 14 per cent in the top of 2013 to February 26.

“Our economy is being fueled by household consumption,” Sicat said to an audience full of influential CEOs representing numerous sectors in the Philippines.

“Revenue from the BPO sector is roughly equivalent to the oil and gas sector,” he added.

In 2012, household consumption accounted for 70.5 per cent of GDP, mostly built off of the inexorable rise of call centres in the country, which are the largest private employers in the Philippines.

Yet the implications of so-called hot money flowing into the Philippines to set up these overseas offices has caused the peso to appreciate, standing at 40.69 peso to the greenback on February 27.

When asked about the effect of the rising peso, Sicat said: “It demonstrates that the Philippines can be competitive and develop skills,” adding “but we don’t want to see [the peso] appreciate too fast.”

This may be just the beginning of external inflows for the country, however. Moody’s currently places the Philippines at a credit rating of Ba1, one notch below investment grade.

“Once we get investment grade status,” Sicat mentioned, “we believe that this will begin to attract capital in.”

Looking into 2013, the Philippine economy is forecast to expand 6.3 per cent by the World Bank, with inflation remaining at benign levels around 3.2 per cent.

The banking sector, required to meet Basel III standards ahead of deadline, will continue to keep capital ratios strong, while industry will expand and upgrade with support in infrastructure development from the central government, Sicat said.

Landmark moments

The PSE implemented landmark initiatives in 2012, and is looking forward to another year of headline-grabbing firsts.

In 2012, the bourse began whole-day trading ending at 3:30pm, kick started a social media campaign, including a Facebook page now with over 11,000 “likes,” and set MPO compliance at 10 per cent.

Meanwhile, along with the assistance of the ADB, Al Amanah Islamic Investment Bank, and the Philippines government, the PSE plans to launch a list of Shariah-compliant equities by end-2013.

New products offered by the bourse in 2013 will include the nation’s first ETF, which will be launched by the beginning of May 2013, as well as Personal Equity Retirement Accounts, an instrument that could be used to help attract money back home from the 12.5 million overseas Filipinos workers. REITs are also in the pipeline, but won’t be launched until an investment-worthy credit rating is acquired.

The PSE is forecast to continue drawing in large volumes due to its favourable taxation regime, which provides a 0.5 per cent tax on equities purchased on the bourse compared to the national 10 per cent capital gains rate for long-term holdings.

With the archipelago’s ranking improving in the WEF’s assessment of competitive economies, the Philippines, with Indonesia, Malaysia, Thailand and Vietnam, are said to be the current frontrunners in global economic performance by the IMF.

 

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Reading Time: 2 minutes

Reading Time: 2 minutes

PHILIPPINES-STOCKS
Filipinos take trading serious: Holy mass at the PSE

Trade volume at the Philippine Stock Exchange (PSE) grew 33 per cent in 2012, making it the fastest growing bourse in Asia marked from when its steadfast rally began in 2010 (38.4 per cent), President and CEO Hans Sicat of the PSE said on February 27 at the Asia CEO Forum in Taguig, Metro Manila.

By domestic market capitalisation, the PSE grew over 25 per cent in 2012, the second fastest in Asia behind Thailand, and the third fastest in the world behind Turkey.

A highly capitalised banking sector, strong demand for residential and commercial property and a BPO sector that has injected nouveau wealth in Filipino households has aided the doubling of the value of the exchange in just 18 months, with the bourse rocketing 14 per cent in the top of 2013 to February 26.

“Our economy is being fueled by household consumption,” Sicat said to an audience full of influential CEOs representing numerous sectors in the Philippines.

“Revenue from the BPO sector is roughly equivalent to the oil and gas sector,” he added.

In 2012, household consumption accounted for 70.5 per cent of GDP, mostly built off of the inexorable rise of call centres in the country, which are the largest private employers in the Philippines.

Yet the implications of so-called hot money flowing into the Philippines to set up these overseas offices has caused the peso to appreciate, standing at 40.69 peso to the greenback on February 27.

When asked about the effect of the rising peso, Sicat said: “It demonstrates that the Philippines can be competitive and develop skills,” adding “but we don’t want to see [the peso] appreciate too fast.”

This may be just the beginning of external inflows for the country, however. Moody’s currently places the Philippines at a credit rating of Ba1, one notch below investment grade.

“Once we get investment grade status,” Sicat mentioned, “we believe that this will begin to attract capital in.”

Looking into 2013, the Philippine economy is forecast to expand 6.3 per cent by the World Bank, with inflation remaining at benign levels around 3.2 per cent.

The banking sector, required to meet Basel III standards ahead of deadline, will continue to keep capital ratios strong, while industry will expand and upgrade with support in infrastructure development from the central government, Sicat said.

Landmark moments

The PSE implemented landmark initiatives in 2012, and is looking forward to another year of headline-grabbing firsts.

In 2012, the bourse began whole-day trading ending at 3:30pm, kick started a social media campaign, including a Facebook page now with over 11,000 “likes,” and set MPO compliance at 10 per cent.

Meanwhile, along with the assistance of the ADB, Al Amanah Islamic Investment Bank, and the Philippines government, the PSE plans to launch a list of Shariah-compliant equities by end-2013.

New products offered by the bourse in 2013 will include the nation’s first ETF, which will be launched by the beginning of May 2013, as well as Personal Equity Retirement Accounts, an instrument that could be used to help attract money back home from the 12.5 million overseas Filipinos workers. REITs are also in the pipeline, but won’t be launched until an investment-worthy credit rating is acquired.

The PSE is forecast to continue drawing in large volumes due to its favourable taxation regime, which provides a 0.5 per cent tax on equities purchased on the bourse compared to the national 10 per cent capital gains rate for long-term holdings.

With the archipelago’s ranking improving in the WEF’s assessment of competitive economies, the Philippines, with Indonesia, Malaysia, Thailand and Vietnam, are said to be the current frontrunners in global economic performance by the IMF.

 

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