New market models seen to lure more listings

ASIAN DEVELOPMENT BANK — ALFONSO EREVE

A SENIOR economist at the Asian Development Bank (ADB) said a local bourse’s program for micro, small, and medium enterprises (MSME) is key to gaining more listings at its board for smaller businesses, as well as to attracting more investors.

“Design is very important to develop more feasible capital markets fit to the demands of the viable MSMEs,” Shigehiro Shinozaki, senior economist at the ADB, said at the Philippine Stock Exchange’s (PSE) forum last week.

“To overcome several challenges to develop MSME capital markets… it is worth considering to review and test, pilot test different market models fit to the financing the demand from MSMEs and investors,” he added.

ADB categorized the MSME capital markets in Southeast Asia into three types. The most common is a sponsor-driven alternative investment market, which can be seen in the Singapore Exchange’s Catalist, the ACE and LEAP markets of Bursa Malaysia, and the Market for Alternative Investment in Thailand.

Some have a dedicated MSME market, such as the Philippines’ SME (small and medium enterprises) board and Indonesia’s Acceleration Board.

Meanwhile, ADB said Vietnam’s UPCoM (Unlisted Public Company Market) is an example of a market board not MSME-focused, but it is offering concessional listing requirements.

The key challenges that affect developing MSME capital markets include low market liquidity, the high costs for listing, which include corporate governance requirements.

MSME owners’ mind-set also affects the development of the capital market, as well as weak capital market literacy among owners.

“The importance of capital markets, especially equity market, will increase further as a growth-capital delivery channel to growth-oriented MSMEs and entrepreneurs,” Mr. Shinozaki said.

For its part, the PSE has relaxed listing rules for initial public offerings (IPO) to encourage small companies to tap the capital markets for funding. It has also introduced guidelines for companies who wish to list on the SME board via a sponsorship model.

The PSE also held a webinar last week along with the Department of Trade and Industry, and the Securities and Exchange Commission (SEC) to educate and encourage more SMEs to list at the local bourse. The PSE said it saw “keen interest” from province-based businesses.

“It is important for us to impart that capital raising in the PSE is not exclusive for big and established firms or for businesses based in Metro Manila,” said PSE President and CEO Ramon S. Monzon said in an e-mailed statement on Saturday.

“The stock market is open to SME companies who need capital to take the next step in growing their business,” he added. — Keren Concepcion G. Valmonte

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