GSIS to reinvest in local stocks to address liquidity crisis

The Government Service Insurance System will make an aggressive return to the local stock market to address a "very serious" liquidity crisis, said Winston Garcia, GSIS president and general manager. "We are presented with a liquidity crisis. GSIS has excess liquidity. We are too liquid right now that we don’t have investments instruments where we can channel our money," Garcia said. In April GSIS announced that it has sold P25-billion worth of shares in several companies in a period of three weeks. The pension fund earned P9.7 billion from the stock sale. Garcia said the agency’s liquidity crisis has gone to a serious level. GSIS is now forced to put P55 billion in short-term deposits, he said. The pension fund is planning to launch an exchange traded fund that would handle P15 billion worth of funds to be reinvested in the local equities market. Garcia said the agency has learned its lesson after it failed to liquidate its heavy exposure in the equities market for almost two decades. He said now is the time to venture into a more liquid “tradeable" fund. Garcia said GSIS intends to double its P6 billion investment being handled by the Bank of Philippine Islands, Metrobank Group, and Banco de Oro by hiring more fund managers next year. He said GSIS intends to entrust its “investible" funds to professionals. GSIS expects its earnings to increase by as much as 22 percent to P50 billion this year from last year’s P41 billion on improved collection efficiency and gains from the sale of its investment portfolio. Garcia also announced that GSIS is set to invest $1 billion in the international market through the pension fund's Global Investment Program. GSIS will name a global custodian and as many as three fund managers next month to manage the $1 billion kitty for its foray into the international market, Garcia said. Firms vying to act as custodian include State Street Bank and Trust Co., JP Morgan Chase N.A. (Hong Kong), and Citigroup while those seeking a contract to manage the fund include BNP Paribas, Credit Agricole Asset Management, Credit Suisse Asset Management Ltd, Deutsche Asset Management, ING Investment Management, Northern Trust Global Investment, Pacific Investment Management Co., Goldman Sachs, and Societe Generale. Garcia said GSIS has run out of options in the local market where to put its “investible" funds worth P150 billion. He said the domestic market is very small, churning between P3 billion to P5 billion in daily volumes while government securities, such as treasury bills (T-bills) are giving unattractive returns. The total consolidated assets of GSIS rose to P433 billion as of June this year from P388 billion in the same period last year. The amount to be invested abroad is equivalent to about 12 percent of the total assets of GSIS while the remaining 88 percent would be invested in the domestic market. GMANews.TV