MANILA - Capital raising activities in the Philippines remained weak for the first six months of the year as investors take a cautious stance amid the global economic slump, the Philippine Stock Exchange (PSE) reported. Still, the local bourse expressed optimism that it will perform better this year as market sentiment begins to recover.

According to PSE President Francis Lim, capital raised as of end-June amounted to P6.11 billion, much lower than the P15.81 billion it generated in the same period last year.

"The global meltdown is a big factor. Most owners of companies feel that the market so far is not giving the valuations they deserve," Lim told reporters in a briefing on Tuesday.

Despite this, Lim said investors are slowly returning to the market as the economy begins to show signs of recovery from the crisis. To date, he said the main PSE index rose 33% to 2,483.39 points from the 1,872.85-point close last year.

"While it could be premature to declare that the crisis is over, both the global and local economies are showing signs that the worst may be behind us, that's why investors are slowly coming back to the market," he said.

According to Lim, the market is particularly optimistic about developments in PSE's strategic initiatives, which include the Real Estate Investment Trusts (REIT), the abolition of the documentary stamp tax (DST) on secondary trading, the Personal Equity Retirement Account (PERA) Law, and the Credit Information Systems Act (CISA).

The abolition of the DST as well as the PERA and CISA have already been signed into law late last year. The REIT, on the other hand, has been recently approved on third reading by both houses of Congress, and is expected to be signed into law by 2010.

On top of these, Lim said the PSE is targeting the creation of a special corporate governance index in the PSE to be funded by the UK government. This, he said, would be coupled with a new measure to be called the Stock Market Competitiveness Act (SMARTCA).

"Most probably next year...[The new corporate governance index] is where the elite of the elite will be listed," he said, adding that details of the SMARTCA are set to be revealed in the coming months.

For his part, BDO Capital and Investment Corp. President Eduardo Francisco said there is actually a lot of capital being raised, but these are largely through the loan and bond markets. He said it is possible to have another P100 billion in bonds and P200 billion in loans during the second half of the year as companies and investors shift to debt instruments to raise funds.

"Debt markets are currently grabbing the market share as listed equity markets are currently difficult to tap," he said.

"The good news is that there is a lot of liquidity. We just have to find a way to have them diversify out of deposits and SDAs (special deposit accounts)," he added. With a report from Karen Flores, abs-cbnNEWS.com