MANILA, Philippines — Philippine Stock Exchange Inc. (PSE) president and CEO Ramon Monzon is bullish on the upside potential of country’s stock market amid an array of reforms being pursued to boost market liquidity and encourage more companies to list.
“Among the ASEAN exchanges, the Philippines, I guess, has the lowest liquidity. So our core strategic initiative for the near term is really introduce reforms to boost market liquidity,” Monzon said in a recent forum.
“Among these, we want to increase new listings. New companies that will list in the exchange, and we have come up with several reforms,” he said.
Monzon said among these key reforms are amendments to the PSE’s sponsor model as well as allowing a direct listing of preferred shares as an alternative to traditional initial public offerings.
The PSE chief also cited the amended real estate investment trust (REIT) guidelines, which broadened the country’s REIT landscape by modernizing eligible asset classes, adding structural flexibilities and optimizing reinvestment compliance.
Aside from these, Monzon said the PSE would also be introducing reforms that will increase trading activity and retail participation in the market.
Monzon said he is confident that these reforms would bear fruit in the future.
“If you look at the P/E (price-to-earnings) ratios of the ASEAN exchanges, it ranges anywhere from 13 plus for Vietnam to 17 for Singapore, and the Philippine markets at 9.56, and we were historically averaging about 12 to 13. So you can see the upside potential of where our market could go,” he said.
Monzon said PSE-listed companies also continue to have robust earnings.
“Again, if you look at the profit margin of the index companies among the ASEAN countries, the profit margin of Philippine listed companies of about 14, it is third only to Singapore and to Indonesia. So there’s a lot of potential in terms of the technical aspect of the stock prices,” he said.
Aside from the positive transformative effects these reforms, Monzon likewise expressed strong confidence in the country’s economic trajectory even amid geopolitical and local political challenges.
“The Philippines was a six- to seven-percent GDP growth rate country. One of the highest in ASEAN at the time. But because of the political problems we’re having, we are now at about 2.5. I believe these problems are being addressed by our government, and I expect the GDP growth to again pick up and go back to that same level,” he said.