Philippine President Scores Hit on Wall Street : Securities: Corazon Aquino has become the first head of state to launch a stock issue on the NYSE. The issue was the Big Board’s hottest item.
Philippine President Corazon Aquino on Wednesday oversaw the successful start of trading in the First Philippine Fund Inc., becoming the first head of state to inaugurate a stock issue in the history of the New York Stock Exchange.
Aquino stood beside NYSE Chairman John J. Phelan at an oak lectern on a marble rostrum overlooking the exchange floor as the bell rang to start the trading day. She was greeted with applause by traders and brokers.
The enthusiasm was more than politeness to a head of state, however, as brokers snapped up the Philippine stock on its first day of trading in anticipation that the country’s economy will continue to improve.
Offered at $12 a share, the fund was the most active issue on the Big Board, rising $2 to $14 a share on volume of more than 2.4 million shares.
Aquino, midway through her eight-day tour of North America, visited the post on the exchange floor where a specialist unit took orders to buy the new stock, a closed-end single country fund that will invest in Philippine business.
Scrambling to get orders in, traders passed slips of paper over her head and around Aquino as she shook hands with brokers and traders and then took a 10-minute tour of the floor.
The visit to the exchange by the Philippine leader, who is to meet President Bush in Washington today, underscored the focus of her tour--to bring more trade and investment to the Philippines and to secure debt relief.
Despite her coup on Wall Street, Aquino complained at later meetings in the New York financial community that American business has invested little in the Philippines.
In an address to the U.S. Chamber of Commerce, she said Asian investors had responded well to recent reforms regarding taxation of foreign companies, liberalization of trade policies, eradication of monopolies and the privatization of government-controlled enterprises.
“As growth figures indicate, business has responded to these basic improvements--mainly Asian business,” she said. “We regret the current diffidence of American enterprise that once played a role in Philippine economic development.”
She said the country will consider further moves to loosen restrictions on direct investments in Philippine stocks.
The First Philippine fund provides an indirect way to invest in the country’s stock market.
While underwriters and investment advisers can, with relative ease, establish such a fund for countries with open securities markets, Third World or developing countries typically have restrictions on foreign investors. Setting up a fund for those countries requires government authorization.
The fund organizers said at least 80% of equity will be invested in Philippine companies that generate at least 50% of their revenue from operations within the Philippines.
Lead underwriter Nomura Securities of Japan said 7.8 million common shares of the fund were offered.
The Philippine issue benefited from good timing, as it went to market at the start of a rally on Wall Street. The Dow Jones industrial index closed up 26.23 points at 2,623.36.
Analysts said demand has been strong for country funds, which in particular have been targeted by Japanese investors as a promising new global investment area.
The closed-end funds usually trade at a discount to the value of the stocks they hold. But more recently, led by a sharp rise in the value of the Spain Fund, some are trading at a premium.
Steven Cress, who follows closed-end funds for Prudential-Bache Securities Inc., said the Philippine economy was running very strongly, fueled by domestic demand and strong corporate earnings.
“The Manila stock market has soared over the last 12 months, and this month it has been the best-performing Asian market,” Cress said. “So certainly the Philippine shares are in demand right now.”
Jon Woronoff, editor of the International Fund Monitor newsletter, said there were jitters about the offering of the fund so soon after last month’s Friday the 13th market plunge. But he added that “it’s an interesting, attractive fund, and I feel it will get off to a reasonably good start. . . . I think it will work up to being among those funds that trade at a premium.”
The investment adviser for the fund is Clemente Capital Inc., whose chairman is Philippine national Lilia Clemente and which manages more than $600 million in assets.
