What if you can invest in global stocks without having to open and navigate foreign investing platforms and currency exchanges?
This is the idea behind Global Philippine Depositary Receipts (GPDRs). The Philippine Stock Exchange (PSE) wants to launch this type of investment vehicle in an effort to make global investing more accessible to Filipinos.
Learn more about GPDRs and what they mean for local investors in this article.
What are GPDRs?
GPDRs are peso-denominated financial instruments that represent an underlying security listed on a foreign exchange.
You can think of them as certificates that signify ownership of shares in a foreign company or units of an overseas investment fund.
While the final details on local GPDRs are still being worked out, here are a few possible features based on what the PSE has shared so far:
- Ownership
Buying and selling shares of GPDRs means you’re trading the rights to own the securities they represent. Like local stocks, investors will be able to trade GPDR shares on the PSE via licensed brokers.
By buying these shares, you may profit through capital appreciation, or when the price of an asset goes up after you purchase it.
However, owning GPDR shares won’t give you voting rights or the potential to earn dividends. You’ll instead have the right to convert your GPDR shares into shares of the underlying security.
- Availability
GPDRs will be issued by authorized banks, investment companies, and other eligible non-bank financial institutions (NBFIs).
These issuers can choose which foreign stocks or investment funds they’d bring to the Philippines through GPDRs, as long as these meet the PSE’s listing requirements.
Additionally, there will be sponsored and unsponsored GPDRs. To list a sponsored GPDR, the local issuer must enter an agreement with the foreign company that issued the underlying security abroad.
On the other hand, unsponsored GPDRs can be issued without the involvement of the foreign company.
Should you invest in GPDRs once launched?
Full details on local GPDR features, requirements, and regulation are not yet final, and so you may want to wait for the actual launch before considering this investment product.
In the meantime, you can look into other options to diversify your portfolio. There are existing local investment products that allow Filipinos to invest in global companies using Philippine pesos.
These include peso-denominated investment funds that put money in global stocks, bonds, and/or pooled funds. You can consider these products if they suit your risk profile, situation, and goals.
