Dream of single Asean asset class still alive

Bourses in the Association of Southeast Asian Nations (Asean) are continuing efforts to promote the unified region as one asset class.

In November, the Philippine Stock Exchange participated in two regional gatherings for capital market promotion and development —the Asean Exchanges CEOs Meeting in Yogyakarta, Indonesia, and the 2019 International Seminar on Capital Market for SMEs (small and medium enterprises) at the Shenzhen Stock Exchange.

The CEOs of Asean Exchanges meet twice a year to discuss activities that will help promote the region as one asset class. In the November meeting hosted by the Indonesia Stock Exchange, programs to make information on Asean capital markets more accessible and organize a roadshow promoting Asean-listed companies were tackled.

One initiative that is close to completion is the revamp of the Asean Exchanges website to contain more data and tools such as stock screener to provide investors more information and means to analyze data across Asean markets, the PSE said in a press statement. There was also a knowledge-sharing session about green finance during the meeting.

The PSE also took part in the 2019 International Seminar on Capital Market for SMEs, which was attended by over 80 representatives from bourses and regulatory agencies from nations along China’s “Belt and Road” project. The seminar was aimed at strengthening cooperation among countries to develop capital markets as an efficient funding source for SMEs as well as generating ideas to accelerate the development of SMEs.

Opportunities

“Most of the registered businesses in the country are SMEs and we would like them to be a part of the capital market ecosystem. This seminar will be very useful for us. We gained insights and a preview of the best practices in boosting SME listings,” said PSE president and chief executive officer Ramon Monzon.

“We will continue to engage with our counterparts overseas to explore opportunities that can help us in programs of further developing our local capital market,” Monzon added.

By the second quarter of 2020, the PSE aims to launch a pioneering platform that will open up a bilateral trading linkage with the Singapore Exchange Ltd. (SGX). After SGX, the PSE also hopes to link up with the Shenzhen Stock Exchange (SZSE) and Stock Exchange of Thailand (SET).

The launch of the PSE-SGX trading linkage is among the three new products that PSE plans to bring to the market this 2020, along with real estate investment trust (REIT) and short-selling mechanism.

Imprimatur

Only stocks that are part of the 30-member Philippine Stock Exchange index (PSEi) will initially be included in the lineup of stocks that Singaporean investors could buy through their stock brokers, and vice versa.

The PSE and SGX are now only awaiting the imprimatur of their respective regulators. In the case of the Philippines, for instance, no entity can sell securities without a license from the Securities and Exchange Commission (SEC). But Monzon said SGX’s accredited brokers may not want to seek a license to trade here. As such, the Monetary Authority of Singapore will have to clear the arrangement for the PSE to be able to seek an exemption from the SEC.

Under the proposed arrangement, special purpose vehicles (SPVs) will be set up, one in the Philippines and another in Singapore, which will function as the clearing and depository participant. INQ