The Philippine Stock Exchange (PSE) is maintaining a P200-billion target for capital-raising activities, with confidence in the equity market seen picking up later this year after a volatile start to 2016.
“It [the domestic market]continues to be highly volatile, even though the global markets are beginning to calm down a bit. That is the good news,” said Hans Sicat, PSE president and chief executive officer, at the recently concluded The Manila Times 3rd Business Forum.
“We think that local fundraising for these IPOs (initial public offerings) and backdoors is probably still going to be more in the second half of the year for the simple reason that it is very hard to price the transaction (right now),” he said.
Capital-raising activities at the PSE include IPOs, follow-on offerings and private placements.
The PSE fell short of its P200-billion target last year, only notching a total P184.60 billion, although this was 20 percent higher than the P153.08 billion recorded in 2014.
The P200-billion goal has remained elusive for PSE, Sicat noted, with companies instead tapping the bond market and bank loans for funds.
“I think most bankers as well as issuers are trying to get the various variables either checked-off or reduced because that volatility is obviously required to price a transaction,” he said.
For now, however, the P200-billion target still stands.
“[W]e think that is probably the right number. Well, right now, probably,” Sicat said.
He said that come the second half of the year, the PSE expects more “clarity” with regard to US interest rate hikes, the direction of the Chinese economy and oil prices, noting that these issues are behind the volatility that has roiled financial markets since the start of the year.
“The assumption is that markets would calm down. There is probably clarity come the second half in terms of what Fed is exactly going to do or has done. Hopefully, a little more clarity about where China is headed … Also, lately there has been over-fascination with oil prices. So those are really the challenges,” Sicat said.
“We hope that the noise level is going to die down … because right now, even if it calms down within the first half, many of these companies [looking to raise funds]would probably say … get all the issues out, given the election and the point of transition [to the new administration],” he said.
“But I would like to think that most of the markets would realize that the Philippine fundamentals have not changed much.”