By Revin Mikhael D. Ochave, Reporter
THE PHILIPPINES should focus first on fine-tuning the implementation of measures that seek to boost the local stock market instead of launching new products, the country’s economic czar said.
“The minimum broker’s commission, reducing the stock transaction tax, allowing same-day volume weighted average price (VWAP) trading and streamlining the initial public offering (IPO) process — I think those are the main steps,” Special Assistant to the President for Investment and Economic Affairs Frederick D. Go told BusinessWorld on the sidelines of the BusinessWorld Economic Forum in Taguig City on Thursday.
Mr. Go said market offerings in the pipeline of the Philippine Stock Exchange (PSE) such as derivatives are “all OK but are not as important,” adding that the focus should be on ongoing initiatives.
“Those are all OK. They should look at all of those. But I think those are not as important as the ones we’ve already handled. The other things like derivatives are also steps in the right direction,” he added.
“We have to get the big things right, and just to make sure that they get implemented according to the intent of the law,” Mr. Go said.
The PSE seeks to introduce derivative products, including options and future contracts, by next year.
Mr. Go said the Philippines has implemented various initiatives to boost participation in the Philippine stock market. These include allowing after-hours VWAP price trading on the same day, as well as shortening the IPO review timeline to 45 days from four to six months.
He added that the country has removed the minimum broker’s commission fee and introduced short selling.
“We have made significant strides to encourage listing in the Philippine stock market and improve participation in the Philippine capital markets,” he said. “Recognizing that the main issue in our market is liquidity, we have taken several steps to improve this.”
Mr. Go said the local stock market is also set to get a boost from the proposed Capital Market Efficiency Promotion Act, which is awaiting the signature of President Ferdinand R. Marcos, Jr.
The measure will lower the tax on stock transactions to 0.1% from 0.6%.
“This should really help liquidity and trading in the Philippine stock market,” Mr. Go said. “I am aware that many small entrepreneurs start their businesses with the goal of someday doing an IPO for their company in the Philippine stock market.”
“It will be signed into law very soon,” he added.
Mr. Go said the bourse should think of ways to spur interest amid weak demand for short-selling, which was launched in November 2023.
“I think there are still some issues,” he said. “From what I understand, the issues there are with the PSE and Bureau of Internal Revenue. They need to unlock those obstacles.”
Mr. Go said the stock market had been hampered by uncertainty when asked about his IPO outlook for the year. The PSE expects six IPOs this year.
“I don’t think that the application process is the obstacle,” he said. “It’s market conditions.”
The bellwether Philippine Stock Exchange Index dropped 1.09% or 69.98 points to 6,305.37, while the broader all-share index fell 0.79% or 29.76 points to 3,708.18.
