SEC mulls measure to add liquidity to bourse

The Securiteis and Exchange Commission (SEC) is considering a review of the minimum amount of shares that can be listed by companies at the stock exchange in order to add more liquidity to the anemic stock market.

SEC Chairwoman Lilia Bautista said there is little volume of trade in the market at the moment since "a large number of shares are in the hands of the few."

There are at present 230 firms listed at the Philippine Stock Exchange but active trades average only a little over 100 issues daily, which means the available shares in over half of public companies are kept stashed in the sidelines.

Bautista said the Commission is looking at requiring listed firms to maintain at least 25 percent of their outstanding shares in public hands but the PSE had raised concerns this move would be counter-productive at this time.

The PSE said that, in fact, more companies, even the so-called blue chip issues such as San Miguel, ABS-CBN and Jollibee, have resorted to buyback schemes just so as to perk up their prices and the market as a whole.

Under a buyback program, listed companies slowly purchase from the market blocks of about 10 percent of their outstanding shares particularly when they feel their current stock prices do not fairly represent their actual market valuation.

As a general rule, companies are required to float in their initial public offerings (IPOs) a minimum of 15 percent to a maximum of 33 percent of its outstanding shares but upon listing, the amount of available shares to the public could go down to less than 10 percent, as in the recent case of Purefoods, whose 94-percent stake owned by the Ayalas were bought by San Miguel, leaving the remaining six percent to the public and other investors. – Conrado Diaz Jr.