PSE TO LAUNCH 3 NEW INDICES TO CATER TO DIVERSIFIED TASTES

The Philippine Stock Exchange (PSE) is set to introduce three new stock indices to attract investors who favor specific investment themes like high-dividend yields, promising mid-cap stocks and environmental, social and governance (ESG) compliance.

At the “Asean: Beyond the Pandemicrisis” forum held by Maybank last week, PSE president Ramon Monzon said the PSE could launch the mid-cap and high-dividend indices by the second half of this year.

The proposed mid-cap index targets investors who want to diversify their portfolio to include companies with lower market capitalization, while the high-dividend yield index will curate the companies that consistently give attractive dividend payouts.

By introducing an ESG index, on the other hand, the PSE could attract the growing number of global investors tracking sustainability initiatives, Monzon said.

ESG has become a global buzzword as more institutions look beyond the usual profitability metrics and turn more discerning on the companies they invest in or do business with.

“This particular ESG index, we need and want to do this, but I also recognize we don’t have the experience or the skills for that yet. So ... we will ask for help from big index providers, whether it’s the FTSE (Financial Times Stock Exchange) or MSCI. We will tie up with them on how to create this index. This is our project for 2022,” he said.

Monzon said investments have been flowing toward “green” bonds in the last three to four years. The equities side has some catching up to do, he noted.

He said, however, that the ESG disclosure framework has started in the Philippines, allowing investors to know where each company was at the ESG compliance level.

The Securities and Exchange Commission approved the “Sustainability Reporting Guidelines for Publicly Listed Companies (PLCs)” back in 2019, requiring the disclosure of compliance and noncompliance with the recommendations provided under the Code of Corporate Governance for PLCs operating in the Philippines.

“[If we have an ESG index,] I think that will start attracting equity investments into these companies,” Monzon said.

Across the globe, more and more investors now deem it important to incorporate their ESG values and concerns into their selection of investments, going beyond the usual process of just assessing the usual metrics like profitability and dividend potential alongside risk trade-offs.