Fashion
The local capital markets may have had significant developments over the years but it remains relatively small compared to other emerging economies in Asia.
In a span of five years, Philippine corporations have already raised over P1.7 trillion from five to eight initial public offerings (IPOs) and 10 to 15 corporate bond transactions a year.
Retail investors have also stepped up, especially for local equity and fixed-income deals, and now account for 50 percent to 70 percent of the volume, compared to previous years where institutions take up around 60 percent to 70 percent.
Although the scenario has gotten better, the number of IPOs and bond issues in the country still pale in comparison to other emerging economies in the region. And while participation from retail investors has increased, most of the investors are coming from the more affluent retail, leaving a huge untapped market, such as the overseas Filipino workers and the unbanked sector.
The challenge, according to BDO Capital and Investment Corp. President Eduardo V. Francisco, is to make the local capital markets more inclusive, enabling the ordinary man on the street to invest in stocks and bonds.
BDO Capital is a full service investment house wholly owned by BDO Unibank that provides securities underwriting and trading, loan syndication, financial advisory, and private placement of debt and equity among others.
Speaking before capital market participants during the recent Euromoney Philippine Investment Forum, Francisco emphasized there is more to increasing financial literacy in the country to achieve inclusivity and make the local capital markets on a par with the developed countries.
One of the solutions, he suggested, is not only to digitize but also to rid of too many touch points for IPO or bond subscriptions as these are roadblocks to encouraging many to invest in the capital markets.
He added subscribing to equities and bonds in the country is too cumbersome due to the numerous documents, forms and identifications required.
“Our Monetary Board, Securities and Exchange Commission, Philippine Stock Exchange are open to new ways to raise the number of investors and make it more available to the masses. We have seen them liberalize rules but we need to propose new products or solutions,” Francisco said.
He added the Philippines should also look into new platforms and models from abroad that the Philippines can adopt, particularly innovative solutions that would minimize documentation.
“Foreign players with platforms abroad are welcome to bring it here. Fintech solutions are also welcome and we can work with the regulators to get approvals,” he said.
