With total revenues cut in half as a result of fewer listings, bottomline earnings registered by the bourse dropped 74 percent to P18.294 million in 2001, from a record P70.063 million a year earlier.
"As a result of the weak economy and the political turmoil, our stock market, already saddled by the stringent provisions of the Securities, Regulation Code, recorded its worst performance in years," said former PSE chairman Felipe Yap in his report to the broker-members.
He said with the market’s slump as a result of receding investor confidence, trading volume drastically fell, averaging a mere P500 million daily. On Oct. 2 – almost a month since the Sept. 11 terrorist attack in the US, the exchange recorded its lowest daily trading volume at only P130 million.
The steep decline in share prices in 2001 also resulted in a 27-percent drop in market capitalization, from a high of P2.6 trillion in January to a low of P1.9 trillion in October.
By the end of 2001, the main index (the Phisix) closed at 1,168.08, down 22 percent from 1,494.5 at end-2000.
Against the backdrop of a weak market, total revenues generated by the PSE fell 51 percent to P160.357 million as its main source of revenues – listing fees – decreased by 57 percent to P113.213 million.
Listing fees are derived mainly from initial public offerings (IPOs) and the issuance of preferred shares, warrants or depository receipts by the listed companies.
In 2001, only three IPOs with a combined value of P241 million were listed at the PSE – SQL*Wizard, Primex Corp. and Federal Chemicals Inc. A year before, over P1 billion were generated by six companies that went through the same IPO process.
The PSE itself, being a newly-demutualized stock corporation, is priming itself up for public offering although with its recent financial performance, it may have to take some more time before an IPO can be conducted as the bourse needs to work harder in making itself a more attractive investment option for investors.
Aside from convincing more companies to publicly list their shares, hence generating more income from listing fees, the PSE plans to spin off its profitable units such as the Information Technology Department to help in outsourcing more revenues for the exchange. – Conrado Diaz Jr.