PSE warns of capital flight resulting from SC's 60-40 ownership ruling

The Philippine Stock Exchange (PSE) on Wednesday expressed its "grave concern" about the capital flight that may follow an “opposing interpretation on foreign capital limitation" in listed firms. In a statement, the PSE said it will take “strong reservations on the reported new interpretation of the Supreme Court (SC) modifying the concept and computation of the 60-40 capital limitation on foreign ownership of public utilities." The SC ruled on Tuesday that “capital" as contemplated in the 1987 Constitution’s provision limiting foreign ownership of public utilities refers to “common shares" and not to total outstanding capital stock. The high court tasked the Securities and Exchange Commission (SEC) to ascertain if PLDT violated the 40 percent limit on foreign ownership of public utilities. The SC decision was the result of deliberations on a petition seeking to annul the sale of PLDT shares the national government sold to Hong Kong-based First Pacific Co. Ltd. The PSE assured that it will work closely with the SEC to clarify the issue. The PSE also revealed that foreign investors have been inquiring about the implications of the SC ruling. Wednesday’s PSE trading results showed the PSEi shedding 40.64 points or 1 percent, settling at 4,249.35 In a disclosure to the exchange, PLDT Corporate Secretary Ma. Lourdes Rausa-Chan said the telecom giant’s foreign ownership “is well below the limit of its capital as this term has been interpreted in numerous opinions issued by the SEC." Chan also said PLDT is not a respondent in the case that led to the SC ruling. Earlier, PLDT chairman Manuel V. Pangilinan said foreigners own 64 percent of PLDT common shares but counting also the preferred shares, Filipinos own 87 percent while foreigners hold 13 percent. Pangilinan said the SC ruling was “extremely disappointing" and characterized its promulgation as “economic suicide." — With Earl Rosero/VS, GMA News