The local stock market has lost P3.578 trillion or 55 percent of its value since the start of the year, as fear and panic selling accelerated amid a deepening global financial crisis, the main composite index has fallen 45.7 percent since closing 2007 at 3,621.60, dropping to 1,971.57 last Friday, according to data from the Philippine Stock Exchange.
The PSE also noted that year-to-date net foreign selling reached P39.31 billion, a reversal from the net foreign buying of P62.97 billion in the same period a year ago, largely due to massive sell-off of stocks by foreign fund managers.
Market capitalization (excluding foreign companies) also declined 40 percent to P2.55 trillion, from P4.25 trillion, while average value turnover decreased 44.7 percent to P3.03 billion.
Total capital raised from initial public offerings (IPOs), follow-on offerings, rights issues and other share issuances amounted to P24.3 billion since the start of 2008, down 72 percent from the year earlier level of P86.4 billion. There were only two companies that listed on the exchange so far this year.
PSE president and chief executive Francis Lim said the Philippine stock market, however, remains resilient, pointing out that it is among the top five exchanges in Asia that have been least affected by the ongoing global financial turmoil unleashed by a meltdown in the US mortgage market.
According to a study prepared by the PSE, the least affected stock markets in the region are Malaysia with the KL composite index falling 40.74 percent, Japan’s Topix index shedding 44.62 percent and Korea’s KOSPI index (45.72 percent). Trailing behind are the Nikkei index (46.35 percent) and the PSE (46.63 percent).
But among Asian bourses, the PSE raised the least capital from January to October this year, raising only $400 million. It also has the least number of listed companies at 246 followed by Indonesia which has 398.
Lim said while the stock market is not insulated from the present crisis, the broad economic and fiscal reforms that were put in place over the last couple of years are providing significant cushion to weather the financial storm.
With the enactment into law of the Personal Equity Retirement Act and the Credit Information System Act, the PSE is now seeking the speedy passage of capital market reforms which include the Real Estate Investment Trust (REIT) Act.
Lim said the exchange is also considering endorsing a proposal that would reduce corporate income taxes within five years from the listing of companies to attract more IPOs.
The PSE is also looking at the possibility of merging its second and small-and-medium-sized enterprise boards to expand the coverage of companies with the inclusion of business process outsourcing companies and various SMEs.