'Foreign ownership issue may dampen PSE's bull run'

by Kathleen A. Martin, ABS-CBNnews.com

Posted at Jan 03 2013 04:17 PM | Updated as of Jan 04 2013 12:17 AM

MANILA, Philippines - The government should resolve the foreign ownership issue, as this may dampen the Philippine Stock Exchange's bullish streak, a Maybank ATR KimEng Financial Corp. official said.

"They have to deal with this foreign ownership question. I think it has a big impact on the stock market and if they don't solve that, it would be a dampener of sorts on the markets," Manuel Tordesillas, president at Maybank ATR KimEng Financial told Business Nightly.

In November last year, the Securities and Exchange Commission released a draft memorandum circular on the rules on foreign ownership, which is expected to affect as much as 13% of listed firms.

The SEC circular reflected a Supreme Court decision in October 2011 which clarified that the 60% Filipino ownership requirement for public utilities must apply separately to each class of shares.

"I think if we can deal with that issue, that would be a very good thing," Tordesillas stressed.

The foreign ownership issue actually stemmed from a court case filed by a certain Wilson Gamboa, a Philippine Long Distance Telephone Company (PLDT) shareholder, who asked the Supreme Court to nullify the government's sale of PLDT shares to Hong Kong's First Pacific Company Ltd.

Such resulted in PLDT's foreign equity problem after the high court in June 2011 said Filipinos must own 60% of the telco giant's common shares as opposed to measuring Filipino ownership against total outstanding capital which includes preferred shares with no voting powers.

But despite the foreign ownership issue hounding markets in the Philippines, Tordesillas said it has yet to reach a point wherein foreign investors are eyeing to pull out funds in the country.

"They're still assuming that everything will remain the same," Tordesillas said.

After conducting a public forum in November last year to finetune the rules, the SEC has asked for position papers on its proposed memorandum circular. However, the regulator has yet to issue a final circular on foreign ownership rules.

The Philippine Stock Exchange in 2012 saw 38 record highs, ending the year at 5,812.73 from its finish of 4,371.96 in end-2011.

In the first two trading days of 2013, the PSE finished at two consecutive highs, with the index closing at 5,934.05 on Jan. 3.