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MANILA, Philippines - The Philippines merits a weight increase in the influential MSCI following the market's ascent to record highs and the corresponding increase in capitalization, the head of the local bourse said.
Hans Sicat, newly-re-elected president of the Philippine Stock Exchange, told reporters that the bourse supports any move that gives a higher weighting for the Philippines since it will attract more investments to the country and improve its international profile.
"Given the fact that our market cap has been increasing relative to, for example, our own economy and we're more or less on par with small Asean countries in that respect, maybe we do deserve a higher weighting," Sicat said.
Robert Vergara, PSE director and president of state-run Government Service Insurance System, said the increasing market capitalization can prompt MSCI to reassess the weight they attached to some of the companies that make up the Philippine index.
As of May 2, total market capitalization of the PSE hit $240.29 billion, 21.4 percent higher than the $197.98 billion at end- 2011.
"Indices do not determine where our market goes. Investors who are attracted to returns will drive our market forward and that will be what triggers an MSCI weighting, not the other way around," said Vergara.
The benchmark index is hovering around the 5,300 mark after rewriting record levels 19 times this year. Year-to-date, it is among the top three performing indices in Asia, along with Vietnam and Thailand.
"As various industries increase their weighting of Philippines Inc., it obviously has a good effect in helping generate even more liquidity to specific stocks and Philippines Inc. as well," Sicat said.
The PSE is working with the Securities and Exchange Commission on introducing a number of new products to raise volumes in the bourse, considered one of the smallest equity markets in Asia.
Among the new products are personal equity and retirement account, securities borrowing and lending, and exchange-traded funds. Implementing rules of the last two may be released by the end of the quarter, Sicat said.
Taxation issues prompted the bourse to put the real estate investment trust in the backburner, but it has revived discussions with regulators for possible amendments to the existing law.
The local bourse has signed a preliminary agreement with Ayala Land Inc. for the transfer of its headquarters in Makati to Bonifacio Global City.
“[The agreement] allows us to start doing very basic schematic design and after that we are working with Ayala Land and FBDC to figure out the next step,” said Sicat, referring to Fort Bonifacio Development Corp.
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