Trading in the equities and fixed-income markets remained robust in the first quarter as local retail investors accounted for nearly three-fourths of stock market transactions during the period, according to a report by the Philippine Stock Exchange (PSE).
In a statement released by the Department of Finance (DOF) yesterday, it also said the PSE reported retail investors accounting for 43.3 percent of the volume traded by local investors compared to just 18.2 percent in 2019 and 26.9 percent in 2020.
Ramon Monzon, PSE president, said despite the significant decline of foreign participation in the stock market to just 25.7 percent in the first quarter of 2021 from 55.5 percent in 2019 and 45.4 percent in 2020, the average trading volume still rose by 49.6 percent from 2020 up to the first quarter of 2021, “indicating that local investors have stepped up.”
The year-to-date average daily value turnover in the PSE as of end-March 2021 was P11 billion, higher than the average of P7.35 billion in 2020, and the P7.29 billion in 2019, the DOF said.
“Market liquidity is off to a good start. Trading in the first quarter remains robust. We have almost a 50 percent increase in value turnover. Retail investors are very active in the stock market at least in the first quarter of 2021,” Monzon said during a recent meeting of the Capital Market Development Council (CMDC).
Carlos Dominguez, DOF secretary and chairman of the CMDC, said the increase in retail investor participation in both markets point to the trust and confidence of the public in the regulatory bodies that are tasked to keep their capital and investment returns safe.
“Let’s keep that in mind — the environment of confidence in the system. Regulators are so important to provide guarantees to investors and ensure them that they are not going to be cheated,” Dominguez said during the meeting.
CMDC is a coordinating body tasked to facilitate the development of the Philippine capital market.
In the fixed-income or debt securities market, Antonino Nakpil, Philippine Dealing & Exchange Corp. president and chief executive officer, said the market performed slightly lower in the first quarter compared to the same period last year, but investor-related trading made up 59 percent or P898 billion of the total volume of P1.5 trillion as of end-March this year.
National Treasurer Rosalia de Leon, also a CMDC member, attributed the growing number of retail investors in fixed-income securities to the measures that had been put in place to make bonds accessible to small investors, and the successful financial literacy campaigns of the Bangko Sentral ng Pilipinas, Securities and Exchange Commission and the Philippine Dealing System Holdings Corp.
Monzon said savings by retail investors who can neither travel nor spend more because of the pandemic may have been diverted to investments in the equities markets.
He noted that capital-raising activities in the PSE have also remained strong, with the year-on-year capital raised growing 116 percent from P19.24 billion in end-March 2020 to P41.63 billion in end-March 2021.
Among the firms that have turned towards the equities market for their funding needs were DDMP REIT Inc., which raised P14.7 billion from its initial public offering; Cebu Air Inc., P12.5 billion from its stock rights offering (SRO); AC Energy Philippines, P5.37 billion from its SRO; and 8990 Holdings Inc., P3.7 billion from its follow-on offering.
Monzon said the capital-raising pipeline remains “robust” despite the COVID-19 pandemic, with several companies having filed applications for an initial public offering or expressing interest in setting up their own Real Estate Investment Trusts.
In the fixed-income market, Nakpil said the secondary market trading was active despite the rise in the benchmark interest rates, particularly in the 10-year Philippine Treasury Bond yields which rose from three percent in January to 4.5 percent in March 2021, in line with a similar trend in US 10-year Treasury yields.
For primary issuance activity in the corporate bond markets, Nakpil said new bond listings reached almost P59 billion in the first quarter, but due to the number of maturing bonds in the same period, the overall amount of listed bonds of P1.45 trillion was lower than at yearend 2020’s P 1.47 trillion.
Among the securities listed in the first quarter were SM Prime’s P10-billion fixed rate bonds (FRBs), Chinabank’s P20-billion FRBs and Rizal Commercial Banking Corp.’s P17.87-billion Asean Sustainability Bonds.
