Shenzhen Stock Exchange buying stake in PSE

By Jennifer B. Austria
16 October 2017  |  Manila Standard

The Shenzhen Stock Exchange is in talks for a possible investment in the Philippine Stock Exchange, a move that could also lure Chinese investors to invest in the local stock market, a top executive said Monday.

PSE president and chief executive Ramon Monzon said in a speech during a forum organized by the Shareholders Association of the Philippines that negotiations with SSE were a part of the plan to reduce brokers’ ownership in the stock exchange.

“Part of our drive to drive down brokers’ ownership to 20 percent is we will be offering additional shares in terms of stock rights and follow-on offering. We are talking to a regional exchange, specifically Shenzhen Stock Exchange to invest in the PSE,” Monzon said.

Monzon said SSE’s possible investment in PSE would be limited five percent as provided for under the Securities Regulation Code.

Under the SRC, no individual can own more than 5 percent of the exchange and no single business group can hold more than 20 percent.

Monzon said the talks with SSE were in “very preliminary stage”

“I am trying to convince then to invest in PSE when we conduct our follow-on offering,” Monzon said.

He said with the partnership, he was hoping to put in place “Shenzhen-Manila Connect” where Chinese investors would be able to invest in the local stock market.

This is similar to Shenzhen-Hong Kong Stock Connect where investors in each market are able to trade shares on the other market using their local brokers and clearing houses.

PSE has an existing alliance with SSE via a memorandum of understanding signed in 2009 .

Under the MOU, both exchanges agreed to share information and experiences on volumes, market price indicators and other pertinent information regarding their respective past performances, market data management, rules and regulations as well as practices regarding market regulation.

PSE plans to conduct a share sale before the end of the year to bring down brokers’ ownership to 20 percent from the current 27.9 percent by offering to sell up to 11.5 million common shares.

Based on the PSE’s current stock price, the sale of 11.5 million common shares could raise P2.76 billion in proceeds.

By reducing brokers’ ownership in the local bourse, PSE hopes to secure the Securities and Exchange Commission’s approval on the former’s planned take over of Philippine Dealing System and Holdings Corp.

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