For the month of September 2006, net inflows from Bangko Sentral-registered foreign portfolio investments more than doubled to US$373.7 million from US$131.5 million in August. Investor confidence was bolstered during the month following the announcement of the 5.5 percent year-on-year rise in GDP during the second quarter, the further slowdown in the inflation rate to 6.3 percent in August, the P14.3 billion budget surplus in August (the fourth monthly surplus posted this year), the maintenance of key policy rates by the U.S. Federal Reserve and the Bangko Sentral, the continued strengthening of the peso and easing oil prices.
Gross inflows of registered foreign portfolio investments* in September aggregated US$805.9 million, of which 78 percent (US$625.8 million) were shares listed in the Philippine Stock Exchange or PSE. Government securities, (mainly Fixed Rate Treasury Notes or FXTNs) accounted for the balance of US$180.1 million or 22 percent. These investments exceeded capital repatriations/ outflows of US$432.2 million, which arose mainly from divestments from listed shares (US$199.7 million) and from government securities (US$144.5 million).
During the first nine months of the year, gross foreign portfolio investments and capital repatriations/outflows totaled US$5.015 billion and US$3.619 billion, respectively, for a net inflow of US$1.396 billion.
Gross investment inflows rose by 6.3 percent, the bulk of which consisted of PSE-listed shares of US$3.434 billion, mainly in the telecommunication, property, holding firm and banking sectors. Investments in peso-denominated government securities, mostly FXTNs, in the amount of US$1.552 billion accounted for 31 percent, while investments in money market instruments of US$27.9 million and peso bank deposits of US$1.1 million had a combined share of 1 percent. These investments were funded with fresh inward remittances of foreign exchange converted into pesos through banks operating in the Philippines, 81 percent (US$4.050 billion) of which originated from Singapore, the United States and the United Kingdom.
Foreign investments in both PSE-listed shares and government securities rose from the comparative year-ago levels by 7 percent and 5 percent, respectively.
Meanwhile, gross capital outflows for the first nine months of 2006 increased by 35 percent to US$3.619 billion from year-ago level of US$2.688 billion due mainly to divestments from listed shares of US$1.303 billion (36 percent of total) and government securities of US$1.602 billion (44 percent). Divestments from money market placements and withdrawals of peso deposits (generally representing temporary placements of proceeds from divestments from PSE-listed shares and government securities) totaling US$714.4 million made up the balance of 20 percent. Profit-taking by foreign investors who took advantage of the strengthening of the peso from investment to repatriation dates appeared to be the main reason for the higher capital repatriations this year vis-à-vis last year.
* These statistics are different from foreign portfolio investments in the balance of payments which represent actual flows during the period under review.