GSIS told to trim exposure in foreign securities

The Securities and Exchange Commission (SEC) has given the state pension fund Government Service Insurance System (GSIS) 60 days to trim down its exposure to foreign securities within the required 20-percent limit.

The SEC’s Corporate Finance Department said the GSIS Mutual Fund has exceeded its limit on investments in non-Philippine securities although this was largely on account of factors beyond its control.

In its report, the CFD said as of Sept. 30, 2000, the GSIS’s stock investments abroad have amounted to an equivalent of P362 million, representing 30.75 percent of its total assets worth P1.177 billion.

The computation was based on the closing prices of the stocks on valuation date although the GSIS fund manager, the World Investment Management Co. of the Philippines Inc. (Winvest), insisted that the more appropriate way to view the international asset allocation is based on the acquisition cost of P266.85 million, which would place the foreign stock portfolio at 22.7 percent of total assets, only slightly in excess of the 20 percent limit.

The GSIS said the breach of the investment limit was not deliberate since this was due to prevailing market conditions beyond their control. For one, the fund said its total assets declined by six percent during the quarter ending September 2000 in line with the market’s overall downtrend.

The GSIS’s unrealized loss of P151.4 million in local securities investments was cited as the main factor that contributed to the decline, more than offsetting the P95.2-million or 36-percent unrealized gain on foreign securities and an additional P3.25-million gain on foreign currency transactions during the period. – Conrado Diaz Jr.