Philippine Stock Exchange turns corporate

Manila's PSE will offer shares to the public next year

By Rufi Vigilar

MANILA, Philippines (CNN) -- The Philippine Stock Exchange has converted from a mutual organization into a stock corporation ahead of a listing next year.

The PSE met an August 8 deadline to demutualize operations under the Revised Securities Act.

PSE chairman Felipe Yap said the new corporation's initial offering of shares to the public will be on or before August 8 next year, but an indicative price has yet to be set.

"The shares are not yet being offered to the public and it's not yet conducive to make placements," PSE chairman Felipe Yap said.

"Hopefully, the market would have resuscitated by then. But an IPO at this time would be a little too optimistic," said Irving Ackermann of I. Ackermann & Co., a member of the exchange for the past 37 years.

More than 180 member-brokers have each subscribed to 50,000 shares.

Shares, trading rights now separate

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Members will be able to sell shares and still enjoy trading rights, since share ownership and such rights are now considered distinct.

A suspension on new trading rights, which now must be purchased from existing members, was also agreed on.

The PSE index shed 30 points or 2.3 percent Thursday to a nine-month low of 1,278.40, on increased foreign selling.

The Philippine market has been weighed down by low investor confidence due to a ongoing hostage crisis with Muslim guerrillas in the southern Philippines and delayed economic reforms.

"It's not just domestic problems," Ackermann said. "The world market is also slow."

Yap said that the PSE's conversion would free it from accusations of being an "old boys' club" and eventually encourage investors.

The present PSE board has eight non-members and seven broker-members.

Arroyo in Malaysia

Meanwhile, Ackermann also commended the Securities and Exchange Commission for easing its prohibition on dealers and brokers operating in the same firm.

"Now, under certain circumstances, it will be allowed," Ackermann said. "As long as client orders are placed first, to prevent front-running."

Analysts said reports that President Gloria Macapagal-Arroyo is considering capital controls similar to those imposed by Malaysia in 1998 affected stock trading Thursday.

Arroyo has been in Kuala Lumpur since Tuesday to monitor peace talks with Muslim separatists and to mend bilateral relations strained by the previous administration's sympathy for jailed politician Anwar Ibrahim and a territorial dispute over Sabah.

"Capital controls is a bad word," Ackermann said. "Thirty years ago (they) meant nobody could get an import license," Ackermann said, noting they also tended to "breed corruption."