Foreign buying grows 6-fold, fuels market bull run

MANILA, Philippines - Foreign portfolio inflows into the local stock market remained buoyant as net foreign buying grew six-fold in the nine months ending September this year to P95.21 billion on attractive corporate valuations and a growing economy.

Preliminary figures culled by the Philippine Stock Exchange showed that the Philippines continued to be on the radar screen of global investors looking for a safe haven with all the uncertainty surrounding the ongoing euro zone crisis.

The Philippine Stock Exchange index recorded new all-time highs 23 times this year, rising 22.3 percent or 974.14 points to finish at 5,346.10 as of Sept. 28. On Oct. 4, PSEi barreled to a new record high at 5,443.74.

Upbeat investor sentiment has attracted companies to tap the equities market for additional capital.

Total capital raised from initial public offerings, stock right issues, private placements, and follow-on offerings during the nine-month period reached P174.9 billion, up 171 percent from P64.54 billion the previous year. This already exceeded the full year 2011 figure of P107.5 billion, which was previously the highest total amount raised in a single year.

Among those that went public so far this year include GT Capital Holdings, Inc., East West Banking Corp. and Calata Corp. Other companies that embarked on capital-raising programs are San Miguel, First Gen, BDO Unibank, Belle, Alcorn Gold Resources and Philodrill.

Boosting market sentiment was the third bout of quantitative easing in the US and the nation’s resilient economic environment, said PSE president and chief executive officer Hans B. Sicat.

The US Federal Reserve in September announced it would purchase an additional $40 billion worth of agency mortgage backed securities per month to further stimulate the world’s largest economy.

Total value turnover during the period under review rose 25 percent to P1.31 trillion, already exceeding the full year 2011 figure of P1.42 trillion.

Aggregate capitalization of listed issues rose 28.5 percent to P10.54 trillion as against P8.2 trillion a year earlier.

In terms of sectoral indices, the financials index emerged as the best performer, climbing 41.5 percent during the January to September period.

This was closely followed by the property index with a 40 percent rise. The holding firms sector gained 28.2 percent, followed by the industrial sector which increased 15 percent.

“The upbeat performance of the stock market is a sign that the exchange’s efforts in further developing the market are paying off,” Sicat pointed out.

To boost liquidity, the PSE extended trading hours until 3:30 p.m. starting in January to align trading hours with that of neighboring bourses in the ASEAN region.

During the year, the PSE’s Capital Markets Integrity Corp. commenced operations as an independent audit, surveillance and compliance unit. CMIC utilizes the state-of-the-art total market surveillance system developed by Korea Exchange to enhance its capability in monitoring stock market transactions.

The creation of CMIC allowed PSE to focus on business and market development.

In order to align with international best practices in the region, the PSE is proposing to consolidate its listing boards which currently comprise the first, second and small and medium enterprises boards. The move will also provide a clearer classification of listed stocks that will help investors evaluate business prospects of companies belonging to the abovementioned listing boards.

To promote good corporate governance, the PSE will be conducting the first PSE Bell Awards in December which will recognize listed firms and trading participants adhering to high standards of corporate governance in the country.