Capital markets need to be inclusive, innovative

Sy-led BDO Capital and Investment Corp. said there is a need to make the local capital markets more inclusive, enabling the ordinary man on the street to invest in stocks and bonds.

BDO Capital president Eduardo Francisco said there is more to increasing financial literacy in the country to achieve inclusivity and be able to make the local capital markets at par with that of developed countries.

One of the solutions, he suggested, is not only to digitize but also to get rid of too many touchpoints for initial public offering or bond subscriptions as these are roadblocks to encouraging many to invest in the capital markets.

He said subscribing to equities and bonds in the country is too cumbersome due to the numerous requirements for documents, forms and identifications.

“Our Monetary Board, Securities and Exchange Commission, Philippine Stock Exchange are open to new ways to raise the number of investors and make it more available to the masses. We have seen them liberalize rules but we need to propose new products or solutions,” he said.

The Philippines should also look into new platforms and models from abroad which the country can adopt particularly innovative solutions that would minimize documentation, according to Francisco.

“Foreign players with platforms abroad are welcome to bring it here. Fintech solutions are also welcome and we can work with the regulators to get approvals,” he said.

The Philippine capital markets may have had significant developments over the years but remain relatively small compared to other emerging economies in Asia.

In a span of five years, Philippine corporations have already raised over P1.7 trillion from around five to eight initial public offerings and 10 to 15 corporate bond deals a year.

Retail investors have also stepped up especially for local equity and fixed income deals and now account for 50 to 70 percent of the volume compared to previous years where institutions take up around 60 to 70 percent.

Although the scenario has gotten better, the number of initial public offerings and bond issues in the country still pale in comparison to other emerging economies in the region.

And while participation from retail investors has increased, most of the investors are coming from the more affluent retail, leaving a huge untapped market such as the overseas Filipino workers and the unbanked sector.

BDO Capital is a full service investment house wholly owned by BDO Unibank that provides securities underwriting and trading; loan syndication; financial advisory; and private placement of debt and equity, among others.