Liquidnet launches Philippines market

Block-crossing network Liquidnet has expanded its Asian market offering with the opening of a Philippines securities market for institutional investors.

Block-crossing network Liquidnet has expanded its Asian market offering with the opening of a Philippines securities market for institutional investors.

The 41st global market for Liquidnet is the firm's ninth in Asia Pacific, increasing the number of investment opportunities available to more than 700 global asset management firms.

Liquidnet’s Philippines equities offering follows the launch of Malaysia in 2010 and Indonesia last year. Some 254 companies trade on the Philippine Stock Exchange, which is among the best performing markets in Asia, and Bloomberg figures indicate foreign investors have pumped more than US$2.2 billion into the market since January.

“Liquidnet continues to expand our network into rapidly growing markets, like the Philippines, reflecting our continuing commitment to bring members access to opportunities that can add greater potential to increase investment performance,” said Lee Porter, head of Asia Pacific, Liquidnet. “The Philippine economy has shown strong growth as it benefits from rising domestic demand, cuts in interest rates and on-going government reform.”

Porter said Liquidnet’s growth strategy was largely organic.

“It’s about building in the customer base and layering in new markets. When we started in 2007, we had 25 buy-side customers connected and now we’ve not got over 230 regionally and over 700 globally.”

On why the Philippines, Porter admitted that while it wasn’t an enormous market or a massive part of peoples’ portfolios, it has been a difficult market to trade.

“We know we can help in that regard,” he said. “It’s not particularly liquid and the spreads are very wide – typically 80 bps compared to 20bps in Hong Kong – so it can be very expensive on a large order and big institutions find it hard to negotiate sizable entering/exiting positions.”

Liquidnet hopes its Philippines business will follow Indonesia, where the firm has been particularly successful.

“When we find opportunities in these markets, our clients tend to take advantage of them because they know we can generate liquidity for them,” said Porter. “We believe this will help the buy-side source liquidity in difficult and hard to trade names, obtain price improvement and reduce information leakage so that there is no adverse price change.”

Presently, Liquidnet is only offering the new market to its existing customer base, which is all offshore.

“Currently we have no plans to set up an office onshore. Moving onshore would be dependent on how large the markets become,” he said, admitting it was difficult to know how big the Philippine market might grow. In terms of relative size, Porter said the Philippines was smaller than places like Indonesia and Malaysia. “That said, we have had some trades in Indonesia and Malaysia which are very outsized.”

With Liquidnet currently active in nine markets in Asia, Porter said he would keep looking for more opportunities in the region.

“We see potential in India, although there are some complexities to being able to trade there,” he said. “The other bigger markets we haven’t yet traded are Taiwan and Thailand but we’ll be looking at those in near future.”

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