PSE activates investment body to manage funds

As part of its plan to enhance shareholder value prior to a mandated initial public offering (IPO), the Philippine Stock Exchange (PSE) has activated an investment committee to manage the funds of the exchange for optimum returns on their investments.

A report by PSE treasurer and newly-elected board director Rodolfo Cruz said since its creation, the investment committee managed to pull in the bulk of the P45.1 million interest income from their investments as of year-end 2002.

The investment committee, he said, was created to preserve the investible funds of the PSE and its affiliates while eliminating undue exposure to corporate risk.

The investible funds of the PSE and its affiliates are placed in government bonds and securities duly registered with the Registry of Scriptless Secrities (ROSS) under the PSE’s name.

The bonds and government securities are bought from universal banks that commit to provide liquidity for the bonds/securities purchased upon call.

At the discretion of the investment committee and with the approval of the board of directors, some investments were made in US dollar-denominated issued by the Republic of the Philippines and placed at varying maturities and yields.

At end-2002, a total of P35.4 million was earned as interest income from various placements that include P11 million in Retail Treasury Bonds; P278 million in government securities; and P84.3 million in dollar-denominated bonds/securities.

Aside from the PSE, the investment committee also manages the investible funds of its affiliates Securities Clearing Corp. of the Philippines (SCCP), the PSE Foundation and the Philippine Central Depository (PCD).

With its higher interest income, the PSE turned in a favorable net profit of P28 million in 2002, or 53 percent higher than in the previous year despite a P15-million operating loss.

Under its demutualized structure, the PSE is mandated to go public a year after although such plan has been put on hold due to the weak stock market and the PSE’s own inability to meet its operational targets on time.