Foreign investors, who invest in companies listed in the Philippine Stock Exchange, are here to stay. No administration, be it in the past or in the present, can claim to enjoy the monopoly of attracting permanent investments on listed stocks just as any president should not take pride in so-called “hot money” that makes it to the local stock market.
As known by the public who trade on listed stocks, “hot money” stays only temporarily because the fund managers, who bring in said investments, have quarterly or even annual reports to file, and capital and their earnings to remit to their headquarters to review their options on the use of their investible funds.
When these foreigners send home their earnings along with their capital, they are repatriating their entire investments, which would mean conversion of their pesos into US dollars. Doesn’t this make the US dollar more expensive, especially if many, if not most of them, would repatriate their investments at the same time, or one after another?
It is a pity that none among the government’s economic thinkers, if the Aquino administration has them, has thought of reviewing the local stock market’s performance not by the Philippine Stock Exchange index that appears on the stock market report at the end of the day’s trading but by how much money has gone out of the country because of dividends.
Has anyone, even among the local followers of the biggest conglomerates that are listed but may not necessarily be public, ever looked at the dividend history of their stock choices? Yes, the distribution of cash dividend is good. How about stock dividend?
As Due Diligencer made a partial review of certain listed companies, it had yet to see any of them distributing stock dividend. Most of them, thru their boards, declare cash dividend. It is very seldom for companies to give out stock dividend; they would rather borrow than touch or reduce their retained earnings that are available for cash dividend.
Data culled from PSE postings show that Globe Telecom Inc., for instance, has an ownership profile that would make it a foreigner-controlled corporation if you the public would go by the ownership of its common shares.
Globe, which is a unit of the Ayala Group, which, in turn, is controlled by the Zobel family, has 132.682 million outstanding common shares of which Singapore Telecom International Pte. Ltd. owns 62.646 million shares, or 47.22 percent. It recently declared P56.25 dividend per share of which it paid P37.50 on March 20, 2014. Computed at 132.682 million outstanding common shares, the two dividends totaled P7.463 billion, of which SingTel got P3.524 billion, which is the amount due its 47.22 percent ownership of Globe common shares.
Then, you go on computing by dividing P3.524 billion by P43, which is rate of exchange, and you get $81.958 million.
That’s only SingTel. How about Globe’s other foreign stockholders? As of June 30, 2014, PCD Nominee Corp. holds for them 23.112 million shares, or 17.419 percent, or P1.30 billion dividend, which when added to SingTel’s P3.524 billion would be equal to P4.824 billion total dividend for Globe’s foreign stockholders.
The distribution of dividend, whether in shares or in stock, depends on the availability of a company’s retained earnings. Globe, being one of the more profitable listed companies, has a reported surplus of P9.576 billion equivalent to $222.968 million.
At P43 to a dollar, SingTel and the beneficial owners of PCD-lodged Globe shares combine for dividend remittance of $112.184 million, which is equivalent to 50.314 percent of Globe’s retained earnings of $222.968 million.
Since foreigners, led by SingTel, control 64.639 percent of Globe’s common shares, they would be entitled to P6.190 billion, or $143.953 million, of P9.576 billion retained earnings. That is, if the telecom company would declare as dividend its entire unappropriated retained earnings, which seldom happens but which could also be done with board approval.
Like Globe, Universal Robina Corp., the food unit of the group of companies controlled by businessman John Jokongwei Jr., has foreigners among its significant stockholders. Although it did not identify any of them in its filing on top 100 stockholders, it said PCD Nominee Corp. holds for non-Filipinos 706.758 million shares, or 32.40 percent.
As of June 30, 2014, URC had accumulated retained earnings of P39.783 billion, which it recently reduced by P6.543 billion after paying P3 per share dividend on March 24, 2014.
In an ownership filing, URC said while JG Summit Inc. owns 1.215 billion shares, or 55.706 percent, it had more foreigners than Filipino public. Foreigners’ holdings of 32.40 percent of outstanding were entitled to P2.120 billion dividend, or $49.312 million at P43 to a dollar.
Thus, Globe Telecom and URC, which are worlds apart in their business activity, combine for total dividends of $161.496 million, which may not be a big amount yet. But considering many more listed companies giving out cash dividend instead of stocks, the total dividend that foreigners take out could be huge.
As the boards of listed companies go more for cash instead stock in approving dividend, will the cost of buying US dollar remain at P43? Due Diligencer will come out with more listed companies and their cash dividend on Friday.