Investment Banker sees PSE’s growth potential

CEBU, Philippines – The Philippine stock market has potential to continue to grow as an investment banker sees investors continuing to want to invest in the market.

Reginaldo Cariaso, senior managing director and investment banking co-head at BPI Capital Corp., said that while the Philippine stock market is relatively small compared to other Asian markets, he sees an increasing number of both institutional and retail investors putting money in local equities.

He said the Philippine market is still mainly driven by foreign investors.

"We are still heavily influenced by foreign investors both institutional and retail who would want to put money elsewhere. That's why no matter how good or strong the Philippines is, some of that money will be influenced by other factors we have no control of," Cariaso said in an interview last week.

He, however, noted the Philippines has seen more and more local investors joining the stock market.

"In the long-run, we hope to see more liquidity," he said.

Furthermore, he also said the strong corporate earnings are seen to continue to buoy the market.

"I think so far, the first quarter corporate earning is pretty strong," he said.

On Friday, the bellwether Philippine Stock Exchange index (PSEi) gained 9.93 points or 0.12 percent to close at 7,767.62.

This was a reversal of 68.84-point drop last Thursday, following th release of the weaker-than-expected Philippine gross domestic product (GDP) growth of 6.4 percent in the first quarter.

The broader all-shares gauge likewise ended 7.83 points, up 0.16 percent to 4,634.25 at the closing bell on Friday.

The Philippine Statistics Authority had reported that GDP growth eased to 6.4 percent in the first quarter, below the lower end of the government’s 6.5-7.5 percent target for the year and slower compared to the 6.6 percent posted in the preceding quarter and 6.9 percent in the same period last year.

Meanwhile, looking ahead, BPI Capital's Cariaso underscored the need for the current administration to implement good policies to ensure the country's sustainable growth.

The administration must pursue its massive infrastructure plan to further support economic growth.

He added that while the Philippines growth is mainly boosted by the growing BPO revenues and remittances from Filipino workers abroad, it should not continue to depend on them as they are usually influence by external factors.

Instead the Philippines should focus on fixing its poor infrastructure and should address how it can lower down its power rates to it can lure more manufacturing companies setting up here, which would later on create more jobs.

"We should build on our other industries and not solely depend on BPO and remittances," Cariaso said. (FREEMAN)