MY TWO CENTS: Why the Phoenix stock market foray in ’07 matters

As the President made his speech last Monday at the Philippine stock exchange many wondered exactly how much about the economy he knows.

Many of those listening are avid listeners of presidential speeches and can spot policy cues even in the minutiae of his manners and language.

Naturally, we’ll expect that much “kuti” from the stock- savvy set accustomed to seeing change as they happen a few cents at a time.

Apparently, its about as much as he needs to know to make sure it stays strong and continues growing, which broadly means create the right policy environment to make sure capital grows is does so equitably.

What matters to him is how small companies can raise capital and small investors can get decent returns from the stock market.

Think Taiwan, where even factory workers monitor stock trends to see how thier own investments are faring.

These are what capital market reforms must mean, and gladly, it seems that this is where we are headed.

Towards this end, Finance Secretary Carlos Dominguez III said continuing reforms in the capital market have made this sector more inclusive and averse to insider trading, which plagued the bourse in the past.

Dominguez is right when he said that the best-managed corporations have managed to grow quickly and offer alternatives for enterprises to raise capital from sources other than traditional bank financing.

An example of this growth is Phoenix Petroleum, which was the first company from Davao City to list on the Philippine Stock Exchange after an initial public offering in 2007.

Back then, only the Manila big boys could play in the stock market. More and smaller companies have followed after Phoenix , gi ving investors a wider menu of stock choices to invest in, boosting its capitalization to 16.4 trillion.

Moreover, Dominguez said reforms in the capital market make it more inclusive, like information relating to the operations of listed companies are available to the smallest investors, shoring up the credibility of the PSE for international investors long used to placing their money in the more popular asian exchanges like Hong Kong and Singapore.

Public listing also forces companies to be more transparent and strive for higher corporate governance standards, enabling them to access international funds for their capitalization and expansions.

These capital market reforms will complement larger state led economic reforms such as the ramped up infrastructure spending and tax reforms enabling the country, and the people access to more market opportunities.

The future will see more smaler investors taking part in stock investments like workers in Taiwan.

In the end, growing the peoples money and the money of our people are what capital market reforms are about.

As long as the president keeps pushing economic reforms, more money in the peoples pockets and an expansion of these will be realized.

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