Market liquidity gives public a hint to invest

CEBU, Philippines - The healthy liquidity in the local economy should be a major factor for people to invest their hard-earned money, BDO Capital & Investment Corp. President Eduardo Francisco said.

"There's really a dearth of good investments," said Francisco in an interview last Friday at the Cebu roadshow of the government's latest offering of retail treasury bonds.

He said that liquidity or availability of cash in the economy currently stands at P1.6 trillion, seen to support other investments other than initial public offerings (IPO) of listed companies.

"The only instrument that will really get the hunger out of the retail investors is really government security," Francisco said.

"There's so much liquidity in the system. They look for investments," the BDO official said.

He particularly the strong demand from retail investors for the new tranche of retail treasury bonds (RTB) being offered by the government until April 6.

Carel Halog, senior vice president at Land Bank of the Philippines, said there's an overwhelming demand for RTB.

"From our side we're getting a lot of interest from investors both retail and institutional," he said. 

The Bureau of Treasury is offering a shorter-dated RTBs with three-year tenor, the second offer under the Duterte administration after the sale of 10-year papers in September 2016 that raised P100 billion.

"The sweet spot is really short-term," Francisco said.

Earlier, the Bangko Sentral ng Pilipinas more money circulated in the economy in February as liquidity growth picked up to a two-month high on the back of strong credit demand.

Domestic liquidity, which serves as the broadest measure of money in the economy, expanded by 12.6 percent in February from a year ago, rising from the 12.3 percent posted in January.

As of February, money supply stood at P9.4 trillion, BSP data showed. Domestic liquidity grew by 1.2 percent month-on-month, with demand for credit tagged as the driver to the sustained uptrend in money supply.

Domestic claims grew by 15.8 percent in February, broadly steady from 15.9 percent in January due largely to sustained growth in credit to the private sector.

Meanwhile, net claims on the central government expanded by 17.3 percent during the month as a result of increased borrowings as part of national government cash operations and its continued withdrawal of its deposits with the BSP. (FREEMAN)