The Philippine Stock Exchange (PSE) is aiming to introduce exchange-traded funds (ETFs) and securities lending to lure overseas investors to one of Asia’s smallest stock markets, according to PSE President Hans Sicat.
The bourse, which lengthened its trading day by an hour to 1 p.m. on Monday, is in talks with government agencies to introduce ETFs and “a system for borrowing and lending securities to increase trading activity,” Sicat said in an interview on Wednesday.
“The exchange is working with potential providers to push specific products,” Sicat said. “We are interacting, educating and briefing the Department of Finance, the Securities and Exchange Commission and Bureau of Internal Revenue to get the conversation to the appropriate level and obtain the right approvals and framework.”
The country’s stock market has been left behind by most of its peers in the region in terms of scale and product offerings. With a market capitalization of $142 billion as of Tuesday, it’s the smallest of Southeast Asia’s five major markets, behind Singapore, Malaysia, Indonesia and Thailand.
Its offerings for investors are limited to common shares, preferred stocks, warrants and depositary receipts. Futures, options and derivatives are traded in Malaysia, where the stock market is more than twice the size of the Philippines, and in Thailand.
The Thai and Malaysian exchanges also have ETFs, which are exchange-listed products that mirror indexes, commodities, bonds and currencies and allow investors to buy and sell them like stocks.
“This can be the first of a number of steps that the exchange can use to attract more interest from international investors,” Ross Baildon, Hong Kong-based head of equity syndicate for Asia at UBS AG, said. “Other things should follow, like the introduction of more products such as options and futures.”
Philippine stock trading has averaged $128 million a day this year, trailing Malaysia’s $597 million, Indonesia’s $604 million and Thailand’s $1 billion, according to data compiled by Bloomberg. An average of $1.26 billion of shares traded daily this year in Singapore, the biggest in Southeast Asia.
Increasing the number of listed firms would also attract fund managers, Khiem Do, Hong Kong-based head of multi-asset strategy at Baring Asset Management Ltd., said.
“The Philippine exchange has to standardize the things it does and offers if it wants to be a global player,” Do said.
“The Philippines has to look at the best practices in the world. Having more companies and products listed on the exchange will help the Philippine market get more visibility in the world.”
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By: Bloomberg News
Source: Business Mirror, Oct. 5, 2011
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