SEC chief retracts claim of P1.7-T market loss due to corruption

SECURITIES and Exchange Commission (SEC) Chairperson Francisco Ed. Lim has withdrawn his earlier claim that recent corruption issues wiped out P1.7 trillion in market value, admitting the information he cited was based on a “fictitious” report.

“I wish to clarify a statement I made in my speech before FINEX on Oct. 7, in which I cited a report claiming that recent corruption issues had wiped out about P1.7 trillion in market value of publicly listed companies,” Mr. Lim said in a statement issued Thursday evening.

“The information, which had been circulating within business circles and cited by some media outlets, was based on what I believed at the time to be a credible industry report. I have since learned that the report was fictitious. I deeply regret any confusion or concern that my statement may have caused,” he added.

Mr. Lim said his intent was to emphasize “the vital importance of integrity in our markets and the devastating impact corruption can have on investor confidence.”

He said the SEC remains committed to promoting transparency, good governance, and investor protection, adding that corruption is “a weapon of mass wealth destruction.”

The clarification came hours after Malacañang dismissed as “fake news” the SEC chief’s earlier statement that corruption scandals had erased about P1.7 trillion from the local stock market.

In a Palace briefing on Thursday morning, Special Assistant to the President for Investment and Economic Affairs Frederick D. Go said Mr. Lim’s claim was “not true,” citing data verified with the Philippine Stock Exchange (PSE).

“The fact is the drop wasn’t 12%,” he said. “I have personally confirmed this with the PSE President and the top brokers in the stock market. For the period mentioned, which is Aug. 11 to 29, the main PSE drop was only 1.60%. As a matter of fact, it was 1.58%.”

“[In] the All Shares Index in our Philippine stock market of 282 companies, the drop was only 1.5%. And in terms of the market cap, which is the clickbait number of that fake social media post, the drop is only 1.4%,” Mr. Go added.

“In short, we have confirmed it’s fake. It’s confirmed. As I said, it’s unfortunate, but it happened,” he said, noting that he had already spoken with Mr. Lim regarding the issue.

AP Securities, Inc. Research Head Alfred Benjamin R. Garcia said the P1.7-trillion figure appeared exaggerated, as market losses in recent months were far smaller.

“Only less than P100 billion were recorded to be lost in the market cap of the Philippine Stock Exchange index (PSEi) over the past three weeks ending Oct. 3. If he misspoke and meant since August, that would be P107 billion only,” Mr. Garcia said.

He added that while the flood control corruption issue has hurt investor confidence, “the numbers simply don’t add up to P1.7 trillion.”

The PSEi dropped from the 6,200 level in mid-September to a low of 5,953.46 on Sept. 30 — a new six-month low — as corruption probes rattled sentiment.

DragonFi Securities, Inc. Equity Research Analyst Jarrod Leighton M. Tin said the market’s recent weakness was “largely sentiment-driven rather than rooted in deteriorating fundamentals.”

“With governance issues casting a persistent shadow, confidence across different investor segments has weakened, prompting a broad selloff in Philippine equities,” he said.

Mr. Tin added that holding firms had been hit the hardest given their exposure to multiple sectors, while property, REITs, and banks also came under pressure due to expectations of higher interest rates.

Despite the selloff, he said, structural reforms — such as the SEC accrediting DragonFi as the first PERA administrator broker-dealer — are “meaningful steps toward strengthening investor participation and promoting long-term wealth building.”

“Excessively negative headlines often signal that the market is approaching a bottom. If corruption concerns have already peaked, sentiment could gradually recover from here,” he added.

Mr. Lim said at the FINEX annual conference that corruption scandals had shaken investor confidence and that “too many firms remain hesitant to go public,” while others were delisting.

To date, Keppel Philippines Holdings, Inc. and Philab Holdings Corp. have both delisted, while 8990 Holdings, Inc. has filed a petition for voluntary delisting effective Oct. 28. Cebu-based Top Line Business Development Corp. remains the only company to have conducted an initial public offering this year, though Maynilad Water Services, Inc. is set to debut on Nov. 7.

On Thursday, the benchmark PSEi fell 0.67% or 41.34 points to close at 6,057.40, while the broader All Shares index dropped 0.47% or 17.64 points to 3,667.01. — A.G.C. Magno and C.M.A. Hufana