PSE Chief Bullish on Market Upside Amid Reforms

MANILA, Philippines — Philippine Stock Exchange Inc. (PSE) President and CEO Ramon Monzon is bullish on the country's stock market's upside potential, driven by a series of reforms aimed at boosting market liquidity and encouraging 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. He added, "Among these, we want to increase new listings. New companies that will list in the exchange, and we have come up with several reforms." Key reforms include amendments to the PSE's sponsor model and allowing direct listing of preferred shares as an alternative to traditional initial public offerings. The amended real estate investment trust (REIT) guidelines have also broadened the country's REIT landscape by modernizing eligible asset classes, adding structural flexibilities, and optimizing reinvestment compliance. In addition to these, the PSE will introduce reforms to increase trading activity and retail participation in the market. Monzon is confident these reforms will bear fruit. "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 explained. Monzon also noted that PSE-listed companies 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 percent, 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." Beyond the positive transformative effects of these reforms, Monzon 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 percent. 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.