• Exodus

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    EMETERIO SD. PEREZ

    EMETERIO SD. PEREZ

    FOREIGNERS account for 50 percent of the daily trading of stocks on the Philippine Stock Exchange. That percentage suggests that without foreign money, local trading would be dull, with the volume not heavy enough to matter to the global markets.

    (Note: The market’s list of winners and losers is found on www.pse.com.ph.)

    If foreigners’ contribution to the market remains constant at 50 percent, their buy-and-sell transactions do influence the indices and the share prices they represent. Lately, their selling spree has been weighing down the Philippine Stock Exchange index (PSEi), which is the benchmark of the market’s overall performance.

    As foreigners continue to unload their holdings, sooner or may be later, most of them could be out of the Philippine market, if not for good, but hopefully only temporarily. No one knows how long the exodus would take.

    PSEI’s 291.73-point drop
    Duediligencer is not in a position to conclude that the flight of foreign money from the stock market resulted from the government’s anti-US policy stance. Neither would it negatively interpret the data collated by the PSE research and analyst group.

    Instead, Duediligencer is reporting in this piece what took place sometime in August, when from the 15th to 19, net foreign selling amounted to P3.101 billion, and grew even further to P3.536 billion the following week.

    A week earlier, the PSEI closed at 7,845.49. Then it began falling. By Sept. 16, the market’s main barometer has lost 291.73 points, ending the session at 7,553.76.

    The public should not have been surprised by the market’s fall given that the PSEI consists of only 30 stocks on which foreigners can make their bets. Rather, they should worry more on how long foreigners’ absence from the market would last. They know fully well that without foreigners, there will be less trade on the PSEi’s 30 listed companies.

    PCD-held shares
    Why do the Securities and Exchange Commission and the Philippine Stock Exchange tolerate the practice by listed companies of hiding the identities of their majority stockholders behind PCD Nominee Corp.?

    The SEC and PSE should give the public a reason or reasons why the PCD Nominee Corp. holds so many shares even as a record stockholder. In some instances, it even tops the list of the top 100 stockholders.

    Prime Orion Philippines Inc. (POPI) is a typical example. As of June 30, when Ayala Corp. has not yet bought into it to become its majority stockholder, PCD Nominee held 1.684 billion shares, or 70.287 percent, which, in turn, are held by various stockbrokers.

    Prime Orion’s public ownership report (POR) contained even much less than what the top 100 stockholders’ list had. It had only two principal or substantial stockholders. Guoco Asset (Phils.) Inc. owned 451.256 million shares, or 18.83 percent while Genez Investments Corp. held 263.819 million shares, or 11.01 percent.

    The most surprising entry in POPI’s POR is the public being the controlling stockholder, with 1.61 billion POPI shares, or 67.16 percent, credited to it.

    No board seat
    If as of June 30, the public really owned 1.61 billion POPI shares, or 67.16 percent, it should have control of the company’s seven-person board. The public did not as of that date, never did.

    On Friday, the PSE website listed seven directors and none of them belonged to the public.

    In fairness to POPI, this kind of ownership presentation in either POR or top 100 stockholders’ list is not its monopoly. Like it, a few, if not many of close to 300 listed companies, lodge their listed shares with the PCD Nominee Corp.

    With PCD Nominee dominating the ownership lists of some listed companies, isn’t the public being taken for a ride by the majority stockholders? Shouldn’t SEC officials and PSE executives take the initiative to change the disclosure rule on ownership reporting to reflect the true public ownership in listed companies that only pretend to be public?

    esdperez@gmail.com

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