By Arra B. Francia
Reporter
ONLY ONE shareholder of the Philippine Dealing System Holdings Corp. (PDSHC) renewed its share purchase agreement (SPA) with the Philippine Stock Exchange, Inc. (PSE), the bourse operator said on Saturday.
“The other shareholders did not think it was prudent of them to renew the SPAs with us because they have already another offer at another price. Except for one shareholder of PDS, the other shareholders who signed with us did not renew the SPA,” PSE President and Chief Executive Officer Ramon S. Monzon told reporters after the company’s annual shareholders’ meeting in Mandaluyong.
He declined to identify the shareholder that renewed the SPA.
The PSE has managed to secure SPAs amounting to around 72% of the PDSHC since the deal to acquire a majority stake in the fixed income bourse started in 2013. These PDSHC shareholders are the Bankers Association of the Philippines; Whistler Technologies Services, Inc.; Investment House Association of the Philippines; The Philippine American Life and General Insurance Co.; FINEX Research and Development Foundation, Inc.; San Miguel Corp. and Tata Consultancy Services Asia-Pacific Pte. Ltd.
The PSE renewed the agreements thrice, before they expired again on March 31.
It was at this time that the Land Bank of the Philippines (LANDBANK) countered PSE’s offer for a majority stake in PDSHC, offering to buy out the PDSHC stakeholders’ shares at P360 each, higher than PSE’s P320 per share offer.
The PSE itself has received an offer letter from LANDBANK to purchase its 20.98% stake in PDSHC for P472 million. Mr. Monzon noted they are still asking LANDBANK for clarification on its offer, specifically on when it plans to conduct due diligence and whether this will affect the final offer price, among others.
“We’ve been pursuing this acquisition, it becomes more difficult now because there is a higher offer. And we have decided that we will not engage in a bidding war with the government. But just as we are subject to an exemptive relief, any other purchases will need to apply for an exemptive relief,” Mr. Monzon said.
Any entity looking to acquire PDSHC would have to secure exemptive relief from the SEC, as per the Securities Regulation Code that says no single group can own up to 20% of an exchange.
The PSE was unable to secure exemptive relief from the SEC, which had directed it to bring down broker ownership in the equities market to less than 20%. After conducting a stock rights offering last March to dilute ownership in the PSE, trading participants still owned 21.71%, according to the SEC.
Further to bringing down broker ownership, the PSE has decided to weed out inactive brokers and declassify them as trading participants. The SEC would then have to revoke the registration of these inactive brokers to make the exercise successful.
“We wrote SEC a letter following up on their process to revoke the certificate of registration of the inactive brokers. We are just following up on that. We have not received a reply,” Mr. Monzon said.
Asked if the PSE could partner with LANDBANK for the PDSHC acquisition, Mr. Monzon said it is possible, adding that he has yet to meet with LANDBANK executives.
“Those things are all possible. We’ll probably try to set, we’ll have to clarify first our letter offer, that’s also a possibility,” he said.
LANDBANK last month announced it made an offer to the shareholders of PDSHC, in line with its goal to buy 4.167 million common shares in PDSHC — equivalent to a 66.67% stake — worth P1.5 billion. The offer period will last for 30 days or until May 20.
This was the second time LANDBANK will be offering to buy out shareholders of PDSHC. Its first bid ran from March 5 to April 5, where only one shareholder agreed to the bank’s proposal.
In January, LANDBANK bared its plan to acquire a majority stake in PDSHC, in a challenge to PSE’s bid.
Finance Secretary Carlo G. Dominguez III earlier said the PSE’s inability to merge with PDS has hampered the growth of the country’s capital markets. He has also expressed support for LANDBANK’s acquisition, saying it will be a profitable business for the government-owned bank.

LONDON — Before the financial crisis hit more than a decade ago, the easy way to test the global outlook was to apply the maxim that when the US sneezes the rest of the world catches a cold.
Much more relevant now is any potential illnesses from a bout of inward-looking US policy, namely imposing tariffs on steel and aluminium imports while keeping natural trading allies in limbo on whether or not it applies to them.
So far, nobody has a clear diagnosis but financial markets have smelled a whiff of change in recent weeks. Conventional wisdom, simple maths and plenty of recent evidence shows reduced global trade leads to reduced economic activity.
That suggests the United States, even though its share of the world’s economic output shrinks as emerging markets keep expanding more quickly, could give the world economy a lot more than a cold, depending on how far the White House wants to push it.
After an extended period of ceding ground to most currencies, the US dollar has surged in recent weeks as it became increasingly apparent to traders and investors that in more ways than one, the US appears to be going it alone.
Faced with a mostly solid expansion, very low unemployment and massive tax cuts just passed by Congress before the turn of the year, the Federal Reserve is now the only major central bank on a clear and certain path toward higher interest rates.
The US is also the only economy among its industrialized peers that is both expanding rapidly and now generating around 2 percent inflation.
Not so for the euro zone, where a spurt of very strong economic activity in the second half of last year appears to be stabilizing in a lower gear, with inflation moving not toward the European Central Bank’s target, but further away from it.
With its key interest rates on the floor, the ECB is still buying tens of billions of bonds a month in economic stimulus and its first rate rise won’t likely come until well into 2019.
The Bank of England now looks set to hold interest rates steady at 0.50% on May 10, a massive about-face from a position it had been drumming into financial markets until very recently — that it was likely going to raise them.
While Britain has its own challenges in how to minimise the economic strain from its decision to leave the European Union, the overall change in tune from the BoE, which also targets inflation at 2%, is striking.
It is a widely held view outside the BoE that Britain’s recent bout of inflation was mainly a result of a rise in import prices after the sharp fall in sterling following the June 2016 referendum to leave the EU.
Before the BoE raised interest rates for the first time in this cycle in November, a strong majority of economists called that out as likely policy error.
For open economies — and that list of course still includes Britain — inflation pressure overall is primarily driven by global forces, not domestic ones.
It is also unusual for any one major central bank in a group of closely interconnected economies — through everything from shared consumer behavior to supply chains — to be the only one setting a certain kind of policy for an extended period.
That is one reason why it is concerning to many that the United States still appears to be leaping ahead with the Fed on a solid path to higher rates while many other economies are stumbling.
The latest Reuters polls of more than 500 economists around the globe suggest optimism remains, but the possibility of a US-China trade war threatens to dampen the momentum now in place after years of staggering amounts of stimulus.
The latest signs of a slowdown in business activity in Europe and elsewhere are not worth worrying about yet, according to BNP Paribas chief market economist Paul Mortimer-Lee.
He is more concerned about the age of the current US economic cycle, and the threat that next year, synchronized growth in the world economy turns into “synchronized slowdown.”
“All this, together with recent market signals, reinforce our long-standing, high-conviction and out-of-consensus call that 2019 will see a significant slowdown, led by the U.S.,” notes Mortimer-Lee.
“The risk is that supply shortages could bring this forward, and also give a bigger boost to inflation. But we should not get too carried away with recent data, which have several characteristics of a current soft patch, not a bog.” — Reuters