His Excellency Benigno S. Aquino III
At the Philippine Stock Exchange, Inc.’s 20th anniversary
[Delivered at the Makati Shangri-La Hotel on December 3, 2012]
The first time I visited the Philippine Stock Exchange was in September of 2010. Back then, we were already talking about the increased confidence in our prospects. You were then only getting into the habit of recording your all-time highs, and average daily turnover was starting to climb to impressive levels, at 4.95 billion pesos that year.
Two years later, we continue to surge ahead. As of July 2012, average daily turnover is at 7.61 billion pesos, and the PSEi’s performance has never been better, with, I am told, 56 record highs in the past almost two and a half years. In fact, I’m told you marked new record highs every trading day last week—and another one today. This, coupled with the 7.1 percent GDP growth for the third quarter of 2012—growth that surpassed all expectations—shows us that the Philippines has come a long way since then. For all these—and on the occasion of your 20th anniversary: my deepest and sincerest congratulations.
While we certainly have much to be thankful for, I have always believed that every achievement must not only be cause for celebration, but must also motivate us to work even harder. After all, the record highs, increase in equities, and outstanding GDP growth are symbols of the potential we have to create a broader and more dynamic Philippine economy. The entire world has begun to train their spotlight on us. Let us prove to them: we are not yet done, we have more to show, and we will build even greater things on top of the foundations we have already laid down. It is up to all of us to harness our potential and steer the economy towards inclusive growth that satisfies the pursuit of profit, promotes equal opportunity, and elevates the standard of living of every Filipino.
Perhaps, more than anyone, you understand the need to be forward looking—that everything we do today must be calculated and measured if we are to reap benefits in the future. Investors, after all, are prospective. So, while you know that each all-time high signifies the continued confidence of investors, you also understand that, in order to sustain this confidence, we must bolster it with concrete action. There is no better way to do this than to show prospective and active investors alike that the Philippines is open for business under new management: management that is putting an end to backroom deals and suspect transactions, so that business, trade, and investment can flourish in an honest and level playing field.
The government, through the Securities and Exchange Commission, has already put in place a number of reforms towards this goal, specifically in your sector. For example, the Investor Protection and Surveillance Department of the SEC was created in 2011 specifically to guard against insider trading and other illegal investment schemes. Just this past October, the Department, with partner agencies, issued an order to the Aman Futures Group Philippines, Inc. to stop its unregistered securities and to put an end to their public solicitation of investments, which unfortunately, had already victimized so many of our countrymen who did not heed the warnings.
The SEC is also finalizing a Capital Market Development Blueprint to improve and expand the Philippine capital market, including proposals to strengthen investor education, through an integration of various programs already offered by the SEC, PSE, and other similar entities, and to improve the equity market by promoting online trading, among others.
These are only some of the initiatives of the government—and, on this occasion, I am pleased to note that the Philippine Stock Exchange is doing its part. To expand opportunities for the Philippine market, you have extended your trading hours significantly, and you have launched the PSEtrade, which will open up direct access to our stock exchange, speeding up the execution of trades.
Justice, fairness, and inclusiveness are the core principles of my administration, and I am glad to see the PSE implementing measures founded on the same principles, to uphold the integrity of operations in your sector. In 2011, the Capital Markets Integrity Corporation, or CMIC, was incorporated as a wholly owned subsidiary and tasked with monitoring the activities of trading participants. Last May, the CMIC also launched the Total Market Surveillance system, which will enhance their ability to detect anomalies, guard against insider trading, and ensure that the rules and regulations are followed.
Your most recent initiative, the PSE Bell Awards for Corporate Governance, also contributes to the promotion of integrity by recognizing outstanding listed companies and trading participants who have complied with the relevant regulations, contributed to the development of the stock market, and possess best practices at par with international standards.
Measures like these are important because investors need to know we are serious about protecting their interests, especially now that confidence in the Philippines is growing by leaps and bounds. In the past, if you noticed a spike of activity in the stock market, a suspicion would normally arise: that this spike was usually due to manipulators scheming to drum up expectations just so they could make a quick profit. They literally created stock market bubbles, with nothing to back it up other than skillful rumormongering. Naturally, these bubbles burst sooner rather than later, leaving investors with empty hands and empty pockets.
My father used to say: “Unless you’re a big boy, don’t play in the stock market. You will only get burned.” Perhaps this was true in those not-so-distant times. But now, there is true and sustained confidence in the country—built not on rumors, but on genuine performance. Today, confidence is growing, because the market looks at the solidity of listed firms, and no longer worries about impunity on the part of people who think they can pull one over investors. The result is the growing of the stock market itself, as it becomes an increasingly attractive proposition for investors.
In a sense, your efforts mirror the reforms we are undertaking in government. You are demonstrating that good governance is a winning strategy, and that by fostering it in your industry, we are able to level the playing field; we are able to establish an atmosphere where outcomes are predictable, where uncertainty is minimized, and where stability allows business to function smoothly. This makes our country a more attractive destination for investments, which creates jobs, empowers consumers, and sustains the virtuous cycle that we are determined to institute—a virtuous cycle whose results we have seen in your achievements.
In 2011, the Philippine Stock Exchange ranked as the top performing broad equity market index among the 55 members of the World Federation of Exchanges. The way things are going now, there is no reason not to believe that the stock exchange will continue to perform well, and that we will be able to realize our dream, as promised by Eusebio Tanco, of breaking the 6,000 index—perhaps in the next 28 days. [Applause] It goes without saying that if it comes earlier, I will be more thankful. We are already on the right path: protecting the gains we have already made, even as we are creating opportunities for advancement.
So allow me to tell you about a recent experience I had talking to His Ecxellency, the Honorable Jens Stoltenberg, Prime Minister of Norway. Their government has what they call a Government Pension Fund Global (GPFG), which actively seeks places to invest in. Norway has quite a significant investment here already: and because they invested in our blue chip stocks that are performing so well, it was so easy to elicit a smile from them when we were inviting them to expand these investments. In many ways I am the salesman-in-chief of the country; and I must congratulate you on being a part of why it is that much easier to invite investments to our shores. Being bullish on the Philippines is increasingly contagious because our success is based on real fundamentals and not merely snake-oil salesman fantasies.
There is no more fitting context in which to celebrate your 20th anniversary than the one we have today: characterized by optimism for our prospects, a commitment to integrity, and the drive to move this country forward. The brightest of futures is ours for the taking. But we must be reminded that every time the bell rings, every time we close another trading day with an all-time high: there are levels still to breach, and that everyone, whether in the government, private sector, or civil society, must do their part to ensure that we sustain the confidence of the world.
Once again, our deepest congratulations on your 20th anniversary. Thank you, and good evening.