By Fil C. Sionil
The country’s macroeconomic environment at the moment is experiencing a stark paradox.
Thought-provoking? Not really, Virginia. It’s an observation and a reflection of the latest macroeconomic developments, which show that the country is at a critical juncture, at the crossroads.
Case in point here: the long-awaited initial public offering (IPO) of Mynt Inc., the parent company of e-wallet GCash, is clashing with harsh inflationary and currency pressures.
Lest I be misconstrued, I’ve nothing against GCash. In fact, like its competitor Maya, I’m among its first users.
It has been observed, though, that since its price-setting, local airwaves have been inundated with infomercials on the goodness of the GCash offering, an all-in-one financial app owned by Mynt and operated by its wholly owned subsidiary, G-Xchange Inc.
No overthinking here. But I take this to mean a subtle way of soliciting increased market interest in the country’s digital financial infrastructure, which analysts believe could raise over ₱60 billion in new money.
For this market watcher who has a penchant for details, the timing of its offer period and its listing marks the 22 years since GCash was launched as an SMS money transfer service of Globe Telecom Inc. in October 2004.
Since then, GCash has become the most preferred e-wallet. Already, it has evolved into a verb: “I-GCash na!”
Its initial trading at the Philippine Stock Exchange (PSE), scheduled for the 20th of this month, comes two days before the Monetary Board (MB), the policy-making body of the Bangko Sentral ng Pilipinas (BSP), is set to decide on the key policy interest rate.
And it is launching at a time when inflation soared to a more-than-three-year high of 7.2 percent in September, while the peso continues to weaken to a record low of ₱62.9:$1 on Thursday, Oct. 8.
Providential? Now what’s the narrative here, you may ask, Virginia?
The IPO, fundamentally, could alter the short-term capital landscape, which, in turn, could result in an intense liquidity crunch. One emerging opinion is GCash’s IPO, the largest maiden share sale in five years since Monde Nissin Corp. in 2021, will create a liquidity mirage.
This is anchored on the current market vibe: the local equity market is feeling its enormity. Its sheer size is causing ripples far beyond the tech sector. Simply put: its debut will essentially reshape the country’s broader economy, traditional banking, as well as retail investing.
I fully agree that the offering is positive for the equities market. It’s a much-needed “shot in the arm” that will lift the local equities market, which has skidded below the 6,000 mark and is expected to stay within the 5,000 to 5,500 level due to the geopolitical risk caused by the continuing Middle East conflict.
For some, the listing, which is happening when high inflation and interest rates make cash or money-market instruments more attractive than equities, could move the financial market.
In what way? From what I hear along the market corridor, we have to wait, as this will show when the subscription period closes.
Talkback to me at sionil731@gmail.com
