Philippine Stock Exchange Inc. will go “full blast” in pushing for the listing of property trusts to boost trading in one of Asia’s smallest stock markets, said Val Suarez, who was named the bourse’s president Thursday.

The introduction of real estate investment trusts will help the exchange face its “biggest challenge” of broadening the stock market’s investor base, Suarez said, and a number of developers are set to sell shares of REITs when a proposal on tax incentives is approved by the government.

The benchmark Philippine Stock Exchange Index has risen 13 percent this year, the third-best performer among Asia Pacific’s 12 biggest equities markets, and the average value of trades has risen by 14 percent as borrowing costs stayed at a record low and economic growth is forecast to accelerate.

“I’d like to go full blast on the listings of REITs in my first year,” Suarez, who’s also appointed the bourse’s chief executive officer, said in an interview in Manila late Thursday. “REITs would bring in more investors and improve the stock market’s breadth and depth.”

The Philippines’ largest builders said they have appointed bankers to help plan for REITs, which typically group properties like office buildings and malls that generate rental income. Ayala Land Inc., the nation’s biggest developer, is targeting $300 million from selling shares in REITs, Chief Financial Officer Jaime Ysmael said in an interview on July 27, while SM Prime Holdings Inc., the largest shopping mall operator, is seeking $500 million, Chief Financial Officer Jeffrey Lim said.

“The introduction of REITs is a positive development for the Philippine stock market and will certainly help grow the investor base,” said Allan Yu, who helps manage about $3.5 billion at Manila-based  Metropolitan Bank & Trust Co. “REITs appeal to both fixed-income and equities investors.”

The introduction of REITs, which needs at least 1,000 shareholders based on the proposed law, will also help the exchange bring in more investors within the Philippines, Suarez said. About 2 percent of the nation’s 90 million people are invested in equities and “active stock investors” make up less than 1 percent of the population, he said.

“Over the long term, I would like to see taxi drivers having investments in stocks,” said Suarez, 51, who joined the exchange in January and was chief operating officer and senior vice president.

REITs may boost the valuation of property stocks, Francisco Sebastian, president at Manila-based First Metro Investment Corp., said in an interview in Manila this week.

The Philippine Stock Exchange Property Index has climbed 17 percent this year on expectations record-low borrowing costs and rising remittances will boost sales. The gauge is trading at 20 times reported earnings, almost twice the 11.5 times for the benchmark Philippine Stock Exchange Index, the widest gap between the two in 2 ½ years, data compiled by Bloomberg show.

The proposal to grant incentives to REITs may face opposition after Finance Secretary Cesar Purisima said July 27 that government must “tweak” its law on property trusts because the tax breaks can “massively erode” the nation’s revenue base.

The stock exchange could have more than three REIT offerings within a year of the issuance of the tax regulations, according to Suarez. As a lawyer, he helped arrange the initial share sales of a number of companies including Ayala Land, SM Prime, Filinvest Land Inc., Megaworld Corp. and Petron Corp., the Philippine exchange said in a statement Thursday.

“We will work for the full implementation of the REIT law,” Suarez said. “My wish is for the tax regulations to come out soon and if it’s little changed from what’s provided by law, then we could still see one big REIT offering this year.” (Bloomberg)