Foreign funds perk up stock market purchases in first half

MANILA, Philippines – The local stock market has bucked the worldwide economic crisis as foreign funds, impressed by the the Philippine economy’s resiliency, have started to trickle back with net foreign buying hitting P7.6 billion in the first half this year, a reversal of the P18.82 billion in net foreign selling during the same period a year earlier.

A net foreign buying position means total foreign buying in stocks exceeds that of foreign selling within a specified period.

In a briefing with reporters, Philippine Stocks Exchange (PSE) president Francis Lim said foreign investors have resumed their buying activities in the Philippine stock market with a number of foreign companies acquiring significant shareholdings in some domestic listed corporations early in the year.

Lim said the main stock index has in fact risen 32.8 percent this year, with average value turnover slightly up two percent at P3.25 billion in end-June. Total market capitalization reached P5.21 trillion or 28 percent higher than the previous year’s level.

“ While it could be premature to declare that the crisis is over, both the global and local economies are showing signs that the worst may be behind us, that’s why investors are slowly coming back to the market,” Lim said.

He said capital-raising activities, however, remained sluggish as companies adopted a wait-and-see stance amid a financial downturn. From January to June, the amount of capital raised in the market amounted to P6.11 billion, down from P15.81 billion a year earlier.

“Although market conditions have been less than ideal since last year, some of our listed companies are still taking advantage in raising capital through the stock market,” he noted.

Lim, however, said he is confident that the revised rule on listing by way of introduction, which facilitated AgriNurture’s recent listing on the exchange, would help boost more listings in the second half of the year.

So far this year, relative to its ASEAN counterparts, the benchmark index PSEi has fared better than Singapore, Thailand and Malaysia in terms of growth, Lim said.

“In terms of year-on-year performance, the PSE has also done fairly well compared to our other counterpart exchanges in Asia. As of end-June 2009, it ranked number four in total value turnover, fifth in domestic market capitalization, and sixth in capital-raising activities,” he pointed out.

Lim added he is also banking on a proposal that will develop an ASEAN trading linkage to further spur the growth of the local stock exchange.

Meanwhile, Lim reported that the PSE has secured financing from the UK government to develop a corporate governance-based board or index for listed companies that want to subject themselves to higher standards of corporate governance. He said this index, which could be set in place next year, will comprise select blue chip stocks. –Zinnia B. Dela Peña, Philippine Star