PSE welcomes SEC hint on relaxed foreign ownership rule

A final resolution on the foreign ownership rule that will be supportive of investments in the country is a welcome development, the Philippine Stock Exchange (PSE) said Friday. 

 

“The mere signal of a direction towards imposing the foreign ownership restriction to common or voting shares appears to have been well-received by the market,” PSE president and CEO Hans Sicat noted in an e-mailed statement.  

 

“It  seems to also have had an immediate impact of supporting the upward movement of the market,” he added. 

 

Late Thursday, the Securities and Exchange Commission (SEC) said it may adopt more market-friendly rules than last year's draft on which stakeholders may append their comments. 

 

The regulator said it received an entry of judgment or clarification from the Supreme Court that says the foreign ownership rule in telecommunications, media, and other industries applies only to voting shares. 

 

The market read this development as a signal that the SEC may give companies more leeway to accept foreign investments as long as control stays with Filipinos.

 

Last Oct. 15, the high court ruled that the constitutional provision on foreign ownership limits apply to all types of shares, making it difficult for companies to allow more foreign investment while complying with the 60-40 rule.

 

News about the possibility of a more relaxed foreign ownership rule drove Philippine shares back in positive territory on Friday after suffering sharp declines from profit-taking on Thursday. 

 

The PSEi closed higher by 33.18 points or 0.55 percent to finish at 6,051.75. 

 

“We are hopeful that the government can issue rules or guidelines pertaining to foreign ownership that will not be deemed disruptive to investor behavior while remaining faithful to the ruling issued by the Supreme Court in this matter,” Sicat noted. 

 

A stricter redefinition of equity capital will reduce the country's attractiveness to foreign investors, and adversely affect both foreign direct and portfolio, according to the PSE. — SOA/VS, GMA News