Lack of interest may foil plan to create SME bourse

CEBU, Philippines - While creating a separate stock exchange for small and medium-sized enterprises may be good for the sector, the lack of interest from investors could also be a problem.

This was the reaction of Norman Jay Go of BPI Securities Corporation when asked whether the stock brokerage firm supports the creation of another stock exchange where SMEs can raise capital to grow and expand their business.

“BPI supports any kind of entrepreneurship activity by the Filipinos. But you also have to consider that when you’re small, you (probably) have a problem with liquidity,” he said in an interview with reporters.

He said potential investors could shy away from SMEs with the belief that their revenues are small companies compared to bigger listed companies.

House Bill 4948 seeks to create the Small and Medium Enterprises Stock Exchange which will become the equities market of small players who cannot meet the minimum capital requirement for the Philippine Stock Exchange listing.

According to the bill, SMEX will list companies with net capital ranging from P2 million to P19.9 million and P20 million to P99 million for small and medium enterprises, respectively.

The local bourse is dominantly composed of listed firms with capitalization of over P1 billion.

Stockbrokers said several SMEs, which account 90 percent of all registered businesses in the Philippines, are not aware that they could actually list with the PSE because of the misconception that it is only intended for big players.

PSE's SME board requires a minimum capital stock of P100 million.

While it is believed the sector’s greater participation can further boost the market, the perception that small companies are not of great choice among investors remains a significant hurdle. 

Thus, SMEs' participating in the capital market can still be challenging for the sector they barely trade with the big ones.  (FREEMAN)