I briefly heard about the story of Benguet Corp, a gold mining company in the Philippines, and the supposed suspension of trading for the stock following failure to disclose receiving default notices from some creditors. There wasn’t much issue, at least for me, when I heard it but surely investors who were trading/owning the stock did suffer a huge blow as the stock lost a quarter of its value a few days after the news broke.
But hearing the following story is shameful:
Now, it looks as if all that excitement was needless or premature. A day before the trading halt was to take effect, the Securities and Exchange Commission reversed the stock exchange order, a move that took the market by surprise.
The bigger casualty could be the country’s stock exchange itself. The confusing episode adds to long-standing investor concerns about political risk, corruption and regulatory uncertainty that have kept one of Asia’s first stock markets, founded in 1927, one of the smallest in the region.
The conflicting actions taken by the SEC and stock exchange are not helpful to the Philippines “which is already being bypassed by many foreign investors who are keener to go into other faster-growing economies in Asia”, according to Luz Lorenzo, south east Asia economist at ATR Kim Eng Securities, a regional stock brokerage.
And perhaps why the Philippine stock market never interested me much: (emphasis mine)
Regulatory uncertainty and the small trading volume, which makes getting in and out of listed stocks quite costly, also worry many investors, says Ms Lorenzo. The Philippine’s daily market turnover only reached $70m (€47m, £42m) last year, equivalent to only 14 per cent of Thailand’s turnover and 18 per cent of Malaysia’s.