By Alexandria Grace C. Magno, Reporter
THE PHILIPPINE stock market’s pipeline of initial public offerings (IPOs) is gaining traction after a slow start to the year, with three companies set to test whether fresh listings can draw capital into a market struggling with weak sentiment and limited liquidity.
Analysts said successful offerings could encourage more companies to tap the stock market, but weak post-listing performance could reinforce investor caution.
“The return of IPO activity is constructive for sentiment because it brings new investment opportunities, improves market depth and can draw attention back to a market that has struggled with limited liquidity and relatively few new listings,” Toby Allan C. Arce, head of sales trading at Globalinks Securities and Stocks, Inc., said in a Viber message.
Mr. Arce said the recent approval of Mynt, Inc.’s IPO is “particularly significant” because the Philippine Stock Exchange (PSE) has said it could become the biggest public offering in its history.
“A well-received transaction of that scale could have a positive signaling effect for other companies considering a listing,” he said.
Mynt, the financial technology company (fintech) behind GCash, plans to offer up to 1.61 billion primary shares and 6.42 billion secondary shares, with an overallotment option of as many as 1.2 billion secondary shares.
Last week, Mynt said it had secured commitments from more than 20 global and domestic cornerstone investors. The commitments remain subject to possible reallocation between tranches, final pricing, completion of the offer and other closing conditions.
However, Mr. Arce said IPO activity alone would not be enough to revive the local bourse, with interest rates, bond yields, foreign flows, corporate earnings, valuations and economic confidence remaining more important drivers of market sentiment.
A big IPO could also temporarily drain liquidity from existing stocks as investors raise cash to participate in the offering, he said.
“The more important signal will therefore be whether new listings attract incremental capital rather than simply redistribute the market’s already limited liquidity,” Mr. Arce added.
Jarrod Leighton M. Tin, a research analyst at DragonFi Securities, Inc., said the performance of the IPOs would be crucial in determining whether the pickup translates into stronger investor participation.
“IPOs can help revive sentiment, but only if they perform well,” he said in a Viber message. “A new listing that trades comfortably above its offer price and delivers positive returns gives investors a reason to re-engage with the market.”
Listings that fall below their offer prices soon after their debut could have the opposite effect by leaving investors with fresh losses, he said.
Mr. Tin said slowing economic growth and elevated inflation are likely to keep sentiment cautious and give the Philippine central bank limited room to cut interest rates. Companies with strong fundamentals and compelling growth prospects could still attract demand despite the weak market, he added.
“It starts with a few successful debuts,” he said. “Once one or two IPOs deliver solid post-listing returns, other companies waiting on the sidelines will gain the confidence to tap the market as well. Momentum builds on proof of success.”
He said IPOs should also be spaced out to give the market time to absorb each listing. A crowded listing calendar could prompt investors to sell existing holdings to fund subscriptions, putting pressure on other stocks.
BDO Securities Corp. President John Tristan D. Reyes said the pickup in IPO activity signals stronger confidence among companies seeking capital and investors willing to deploy funds.
Still, IPOs alone would not be enough to drive a sustained market recovery, he said.
“Ultimately, broader factors such as economic growth, the interest rate environment, corporate earnings, and overall liquidity will remain the main drivers of sentiment,” Mr. Reyes told BusinessWorld in a Viber message.
‘SOMETHING TO LOOK FORWARD TO’
Three companies are moving ahead with IPOs this year: Mynt, PLDT Inc.’s data center arm VITRO, Inc. and Aznar Shipping Corp.
Mynt filed in June for an IPO of up to P92.3 billion, while VITRO has filed for what could become the country’s first digital infrastructure real estate investment trust. Aznar Shipping followed in September with a proposed offering of as much as P737 million.
Mynt has secured PSE approval, with its listing targeted for Oct. 20.
Denise Joaquin, a research analyst at COL Financial Group, said the Mynt and VITRO listings could renew interest in the market by giving investors exposure to fintech, data centers and artificial intelligence-related growth.
“The upcoming GCash and VITRO IPOs could give investors something to look forward to as they could help bring renewed interest in the local market, especially since they somewhat give exposure to themes like fintech, data centers and AI-related growth,” she said in a Viber message.
Ms. Joaquin said the offerings could provide further support if they attract fresh foreign participation and broaden the sectors represented on the PSE.
She cited reports that Mynt could price its shares closer to P7 apiece, below its maximum offer price of P10, which could reflect the weaker market backdrop and the need to offer investors a more attractive entry valuation.
Mynt’s final offer price is expected to be set on Oct. 1 following the completion of bookbuilding.
Mr. Arce said realistic valuations would be crucial, as overpriced IPOs that fall below their offer prices could hurt investor confidence.
“A healthy IPO market requires more than one or two marquee transactions,” he said. “But the real measure of success will not simply be the number of IPOs; it will be whether those listings deepen the market, attract new capital and give investors credible companies they are willing to hold beyond listing day.”
PNB Holdings Corp. made its PSE debut last week through a listing by way of introduction.
The PSE said in August that it was targeting P203.4 billion in capital raising this year, based on applications for IPOs, preferred share offerings and private placements.