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'Booming stock market to create more jobs for Pinoys'.

The country's booming stock market is expected to help drive jobs growth in the months ahead, a deputy minority leader said last Sunday.

Rep. Luis N. Campos Jr. of the Second District of Makati City made the statement after two of the country's largest lenders-Metropolitan Bank and Trust Co. (Metrobank) and Bank of the Philippine Islands (BPI)-announced plans to sell P60 billion and P50 billion worth of new common shares respectively via stock-rights offerings.

'Some of the nation's largest listed firms will surely take advantage of the surging market to sell new shares either through rights offerings or private placements, so they can generate fresh funds for business expansion. And when businesses expand, new jobs are always created,' Campos said.

'Listed companies find it easier to offer extra shares for sale at a discount when stock prices are going up, and when there is great anticipation of prices rising further,' Campos added.

Last week the two banks bared their plans just as the Philippine Stock Exchange (PSE) index hit a new record high of 8,969 points.

According to Campos, the PSE index is so far up another 4.1 percent, or 257 points this year, closing last Friday at 8,915 points. The index closed 2017 up 25.1 percent at 8,558 points.

'Both Metrobank and BPI said they intend to use the proceeds from their rights offerings to build up their resources and step up their lending activities to businesses, as well as consumers,' Campos said.

Besides Metrobank and BPI, three other PSE-listed firms-Integrated Micro-Electronics Inc., Robinsons Land Corp. and PetroEnergy Resources Corp.-have also bared plans to sell a total of P26.3 billion worth of new shares through rights offerings to fund their business expansion.

Meanwhile, DoubleDragon Properties Corp. is set to conduct a P7.5-billion follow-on share offering.

Campos also sees the roaring stock market boosting consumer confidence and spending.

'Households directly and indirectly invested in the stock market will be encouraged to spend a bit more, as the value of their savings increase, thus, further driving the demand for goods and services and overall economic growth,' Campos said.

He added that the National Treasury is also expected to gain from the 'vibrant trading' at the PSE.

'The government collects a significant amount of tax revenues from the stock market, including those from the stock transaction tax [STT] that Congress increased effective January 1,' Campos said.

Under the new Tax Reform for Acceleration and Inclusion law, Campos said Congress jacked up the STT to six-tenths of 1 percent from one-half of 1 percent of the gross value of the shares sold.

'The STT collection every trading day at the PSE should increase by 20 percent due to the upward rate revision, without adjusting for any increase in aggregate value of the shares sold there [every day],' he said.

According to Campos, an average of P8.06 billion worth of shares were sold every trading day at the PSE in 2017.

'This implies that the government raked in some P40.3 million in STT revenues alone every trading day last year,' he added.

Campos added the government also collects a 12 percent value-added tax (VAT) on stockbroker commissions from the buying and selling of shares, a 10 percent final withholding tax on cash dividends distributed by listed firms to shareholders as well as documentary stamp taxes.
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Publication:Business Mirror (Makati City, Philippines)
Date:Jan 22, 2018
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