Volatile stock market not good for new IPOs

This year is deemed not good for companies to go into initial public offering, or so said Abacus Securities vice president and director Jack Huang.

“IPO itself is good, but it’s a matter of timing. This year, companies that are getting to it may encounter a lot of head wings” Huang warned.

The volatile stock market landscape will bring new IPO entrants into difficulties, unless the company is into the sunshine industry, such as mining.

He said the market is going down, due to demand distractions such as the surging oil prices, and the perceived rice shortage that will cause inflationary shock, among others.

In an interview, Huang said companies that are pursuing their IPO plans will have take the risk of the falling market.

Thus, he recommends waiting for the market to settle from a fall and go back to recovery state going upward, rather than “catching the falling market”.

“This year is not an encouraging year for companies to go into IPO,” he said.

On the other hand, Philippine Stock Exchange (PSE) had been inviting companies to go public through IPO.

PSE officials even conducted a series of roadshows around the country, including Cebu to lure more companies to raise capitalization requirement from the investing public.

PSE president Francis Lim said there is a need for SMEs to go into public offering, in order to expect profitability, increase capitalization, among other benefits.

“We want SMEs to learn more and participate or take advantage of the stock market,” Lim said.

According to Lim, PSE has purposely created the SME Board to serve the need for SMEs by going public. He said this opens doors for SMEs to high profitability, and wide partnership prospects.

As of first quarter 2007, there are 239 listed companies in the PSE, three of which are SMEs.

These companies which are publicly-listed are into banking and financial services, mining/oil, property, commercial and industrial, holding firms, services, and SMEs sectors.

“We want to inform all companies about the benefits of going to public to raise funds, and make way for expansion,” Lim said.

Last year also, Aboitiz Power Corporation (APC) entered into the IPO market, together with some other companies like Splash Corporation, among others.

There are also a number of Cebu-based companies which reportedly announced their plans to venture into IPO.

For his part, former Cebu Chamber of Commerce and Industry (CCCI) president Jose Ng said that although going into IPO is a tempting venture for homegrown businesses, it will take a while for Cebuano companies to get convinced into going public.