There is only five months left before the Securities and Exchange Commission  (SEC) publishes the revised guidelines for foreign ownership, and analysts believe that whatever revisions the agency

may come up with will not cause a stop to the market’s remarkable ascent, according to analysts.

Bede Lovell Gomez, First Metro Investment Corp. (FMIC) investment advisory deputy group head, said in an interview with The Manila Times that the local bourse simply has to adjust to the SEC foreign ownership rule, but in the long run this should not hamper the unstoppable growth momentum of the local stocks.

“It [foreign ownership rule] should not actually affect so much the stock market. It’s just a matter of adjusting itself. We might see some short-term negative impact but I don’t think it will be much of an issue. It will adjust by itself,” he said.

Gomez added, however, that the foreign ownership rule is an issue to be treated as really important, especially by companies that are planning to go public this year.

“Foreign ownership is giving the market more choice. More choice of companies to invest, more companies to participate,” he said.

Gomez also said that complaints on the SEC foreign ownership rule shouldn’t really be an issue, because this will not stop the progress of the stock market.

Ismael Guerrero Cruz, president of IGC Securities Inc., also told The Times that if ever the strict implementation of 60-40 foreign ownership rule materializes, there will really be no problem because companies will only be asked to comply.

“There is really nothing new about the 60-40 percent ownership rule, we are just being asked to comply. I think that will not be any problem,” he said.

“We all know that there is 60-40 foreign ownership rule and the Supreme Court [SC] is upholding that. And then there’s so many kind of financial instrument that they can employ but the SC court said, let’s stick with 60-40, so what did the SC said, with every class of security, comply with the 60-40,” Cruz explained.

He also took note of that even Philippine Long Distance Telephone Co. has plans to comply with the rule.

SEC, in the previous week, said that it is planning to formulate “less strict and market-friendly” foreign ownership rules, after the High Tribunal filed an Entry of Judgment pertaining to the definition of term “capital.”

“We do not want a rule that is difficult to implement,” SEC Chairman Teresita Herbosa said.

“We want to come up with rules that would lessen conflicts and controversies,” she said.

Herbosa also said that the reason why the agency has to come up with the guidelines fast is because the High Tribunal came up with an Entry of Judgment relevant to foreign ownership.

The entry of judgment of the High Tribunal reads: “We partly grant the petition and rule that the term capital in Section 11, Article 12 of the 1987 Constitution refers only to shares of stock entitled to vote in the election of directors and thus the present case only to common shares, and not to the total outstanding capital stock [common and non-voting preferred shares].”

“Respondent Chairman of the SEC is directed to apply this definition of the term ‘capital’ in determining the extent of allowable foreign ownership in respondent Philippine Long Distance Telephone Co., and if there is a violation of Section 11, Article 12 of the Constitution, to impose the appropriate sanctions under the law,” the High Tribunal said.

Another public dialogue on foreign ownership of companies will be held before the SEC releases the final draft of the foreign ownership rules in June.