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PSE asked to report on SME participation in stock market

THE Philippine Stock Exchange (PSE) has been ordered to submit a progress report on the participation of small and medium enterprises (SMEs) in the stock market, amid a broader effort to encourage listings from small businesses.

In a statement Monday, the Department of Finance (DoF) said Secretary Carlos G. Dominguez III told Ramon S. Monzon, president and CEO of the PSE, to submit the report to the Capital Market Development Council. The report should tally the actual number of SMEs listed on the PSE, it said.

The PSE is currently rolling out a marketing campaign to inform small companies of the relaxed listing rules for initial public offerings, in a bid to encourage more small companies to go public.

Mr. Monzon said the PSE has been working with the Trade department and the Board of Investments to identify potential companies that are ready to go public.

The PSE in March relaxed listing requirements both for the main and the SME boards and has adopted “a measure that will gauge a company’s suitability for listing despite the challenges it is facing due to the pandemic.”

The changes include easier track record and operating history norms, with new guidelines for sponsor models in the case of those looking to list on the SME board through a sponsor company.

Mr. Monzon said more tools are available online for companies to assess their readiness to conduct IPOs. The same tools can also help investment houses make their own assessments of listing prospects.

Compliance struggles and the impact of the pandemic may have caused SMEs to shun listing on the exchange, Timson Securities, Inc. Trader Darren Blaine T. Pangan said in a Viber message.

“It may be the case that some SMEs still find it hard to satisfy the general criteria to be listed in the SME board, especially now that the pandemic may have severely impacted some of them,” Mr. Pangan said.

However, with some rules eased, he said more companies will likely be encouraged to go public in the coming quarters.

The PSE held an online forum on April 7 as part of its marketing campaign, in which 217 investment houses, law firms and other organizations participated to learn more about the amended listing rules.

A roundtable discussion is scheduled for May 25, he said, in which members of the Investment House Association of the Philippines, advisory firms, institutional clients and executives of leading targeted companies are expected to join.

Meanwhile, the government also provided technical support in preparing a capacity-building program for SMEs and startups, he said, with the help of the United States Agency for International Development.

Citing data from World Federation of Exchanges, the DoF said the Philippine stock market had only 268 listed firms, against 927 on Bursa Malaysia and 367 on the Hanoi Stock Exchange as of 2019.  — Beatrice M. Laforga

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