Maharlika says focus is on long-term investments amid calls to help stem stock rout

THE MAHARLIKA Investment Corp.’s (MIC) focus remains on long-term investments, its chief said amid calls for its help to stabilize the Philippine stock market, which has been on a downtrend amid weak sentiment due to a widening corruption scandal that has threatened the country’s growth prospects.

“The Maharlika Investment Corp. is guided by a dual mandate: to generate optimal, long-term financial returns and contribute to the nation’s long-term development. Our role is not short-term market stabilization. Our investment decisions are driven by a strategy that prioritizes sustainable growth and prudent risk management,” MIC President and Chief Executive Officer Rafael D. Consing, Jr. told BusinessWorld via Viber.

“With a paid-up capital of P125 billion, the MIC’s focus is on building a diversified portfolio of assets through rigorous due diligence to achieve these goals,” he added.

Mr. Consing was responding to a statement made by Philippine Chamber of Commerce and Industry Vice-President Bryan L. Ang, who called on the sovereign wealth fund to deploy some of its cash to stimulate the stock market by buying blue-chip shares, according to a report on Bilyonaryo.com.

MIC holds a 20% stake in Synergy Grid & Development Phils., Inc. The sovereign wealth fund also signed an agreement with Saudi Arabian energy company ACWA Power to develop renewable energy projects for off-grid locations.

“Institutions like the GSIS (Government Service Insurance System) and SSS (Social Security System), with their distinct mandates, are perhaps more suitable for direct market stimulation,” Mr. Consing added.

Both state-run pension funds can invest in private equities and securities, as well as government securities, to help grow their investment incomes and extend their fund life.

The MIC chief also assured the public that the fund “is being managed with the highest standards of governance and transparency to deliver on both financial returns and our country’s economic development and prosperity.”

President Ferdinand R. Marcos, Jr. had flagged anomalous flood control projects during his State of the Nation Address in late July. This sparked several investigations into alleged corruption involving lawmakers, government officials, and private contractors.

State economic managers have said that the scandal could affect gross domestic product growth due to the likely slowdown in government spending amid increased scrutiny.

This month, the Bangko Sentral ng Pilipinas also said that the issue has affected business sentiment, which partly led to its decision to deliver a fourth straight 25-basis-point cut to help stimulate domestic demand amid softening economic prospects.

As more details about the corruption mess surfaced in Congress hearings, the Philippine Stock Exchange index (PSEi) has gone down, settling at the 6,000 level as of last week from the 6,300 level recorded early in August, with analysts attributing the drop to both weak domestic sentiment and global trade policy developments.

On Monday, the PSEi edged down by 0.09% or 5.46 points to end at 6,084.07, while the broader all shares index slipped by 0.08% or 3.16 points to close at 3,661.92.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the MIC should stay focused on its mandate of pursuing long-term investments rather than deploying capital to buoy the market.

“(This is) in view of other more important investment priorities with bigger long-term benefits,” he said.

Mr. Ricafort said the MIC’s investment decisions should be guided by the highest risk-reward tradeoff and the biggest positive impact on the economy and society.

“The hurdle rate for return and benefit for the country is much higher in terms of economic growth and development. That is more inclusive.” — Aubrey Rose A. Inosante