Foreigners dumped P59.711B listed shares in 2015

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EMETERIO SD. PEREZ

EMETERIO SD. PEREZ

IN fairness to businessman William Gatchalian, he is transparent in disclosing his donations thru a listed company. From 2010 to 2012, his donations—which he coursed thru Puregold Price Club Inc. which he owns—totaled P75.4 million. The amount was defined under “donations and contributions” but without “political” for a modifier.

Puregold was listed on Oct. 5, 2011.

The entry was not reported under “Consolidated Statements of Comprehensive Income”; it was a footnote to Puregold’s audited financial filings from 2010 to 2012.

A footnote simply explains an accounting entry for the information of the public, who are among the minority stockholders of Puregold.


Since Gatchalian did not define “donations and contributions” to be “political,” it is up to the public to make their own interpretation or conclusion. The filing served only as compliance with the full disclosure rule that governs listed companies.

If the public would be interested in the details of Gatchalian’s “donations and contributions,” Puregold reported the amounts by year: P8.7 million in 2012; P10.3 million in 2011; and P56.4 million in 2010.

In addition, Gatchalian’s charity even extended to another listed company. Cosco Capital, which the businessman also owns, reported in an audited financial posting under “donations and contributions” the amount of close to P5 million.

Legal opinion
By issuing in 2015 a legal opinion against corporate political donations, the Securities and Exchange Commission (SEC) may have intended to protect the assets of listed but not necessarily public companies.

This opinion is good, particularly for the public who trade in listed stocks. As always, the majority stockholders have the resources to protect their interest which, in some cases, are contrary to those of the public. This is the reason why they dominate the boards, including the appointment of “independent” directors who are never independent at all because they serve at the pleasure of the owners.

The task, however, of SEC Chairperson Teresita Herbosa and the other four members of the five-person commission is more than just issuing legal opinions. They could do more as securities regulators by implementing SEC policies, for instance, by reviewing quarterly reports and audited annual financial statements.

Due Diligencer is making the suggestion not to overburden the SEC but to give Herbosa and her fellow commissioners something to do during their remaining years in office. With her and other commission officials enjoying a fixed seven-year term, they may opt to live up to the expectations that they can protect the investing public against the manipulations of the majority.

Not that I am making an imposition on the SEC. Rather, my humble suggestion should make its and its officials’ responsibility more attuned to the needs of the public. Yes, why don’t they start reading the financial filings of listed companies for possible violations of the market’s full disclosure rule?

Foreigners dumping?
Perhaps, it won’t be an imposition on SEC officials to also look into the reason or reasons why foreigners who invest in listed stocks have been dumping their holdings. Of course, they may not know anything about the exit of foreign funds from the stock market. They should ask Hans Sicat, president of the Philippine Stock Exchange (PSE), how to find the number of shares that foreign funds have been dumping lately.

The amount of foreign investment outflow from the equities market reached P59.7 billion as of Dec. 31, 2015 and has reached P4 billion in the first two months of 2016. I don’t have any clue when such foreign selling would possibly end.

(Note. Unfortunately for researchers on investments, the SEC does not come out anymore with numbers on the foreign liquidation of their holdings. More on this in another Due Diligencer piece.) I hope I am wrong in concluding that foreigners may have lost faith in our government leaders and in how the SEC has been tolerating the oppression perpetrated by company owners on minority stockholders. Herbosa and other top SEC officials, including the directors, should not demonstrate their nationalism by favoring Filipinos over foreign investors. It is enough that they treat fairly all investors in listed stocks, be he/she is a Filipino or a foreigner.

esdperez@gmail.com.

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3 Comments

  1. The main reason for the outflow is US economy is getting stronger and they raise theirinterest rates which is a sign of stronger economy. Money always looks for safe haven and the safe place for their money is the US. That is also the reason why no foreign investments came in during martial law days because their money is not safe in the Philippines.

  2. The government officials esp at SEC doesnt know nothing.. this is the reason why foriegn investment esp indirect withdraw from our country and go somewhere…

  3. Duediligencer apologizes for a serious error in reporting that businessman William Gatchalian owns Puregold and Cisco. Businessman Lucio CO and his family are the majority stockholders of both companies.