November 2006 Flows
For the month of November 2006, the net inflow from Bangko Sentral-registered foreign portfolio investments amounted to US$263.6 million. Contributing to the sustained positive foreign investor sentiment were the upgrade from “negative” to “stable” of the outlook for the country’s credit ratings by Moody’s Investors Service, the upgrade by both the IMF and World Bank of their outlook on the country for 2006 and 2007, the further slowdown of the inflation rate to 5.4 percent in October and robust third quarter corporate results of several blue chip companies. The National Government’s report that it kept its budget deficit in October at only P5.8 billion, bringing the year-to-date deficit to P56.3 billion (well below the P125 billion ceiling for 2006), as well as the strengthening of the peso were also important factors.
Gross inflows of registered foreign portfolio investments in November aggregated US$926.8 million, of which 66 percent (US$609.5 million) were shares listed in the Philippine Stock Exchange (PSE). Government securities, mainly Fixed Rate Treasury Notes or FXTNs accounted for the balance of 34 percent. These inflows more than offset capital repatriations/outflows of US$663.2 million, which arose from a) divestments from listed shares of US$206.2 million and government securities of US$192.3 million, and b) withdrawals of money market placements of US$0.1 million and peso deposits of US$264.6 million.
January-November 2006 Flows
During the period January to November 2006, gross foreign portfolio investments and capital repatriations/outflows totaled US$6.986 billion and US$4.875 billion, respectively, for a net inflow of US$2.111 billion. This cumulative net inflow level is now over one percent higher than the US$2.082 billion level in the comparable period in 2005 and 0.3 percent or US$7.9 million more than the US$2.103 billion for the whole of 2006.
Gross investment inflows, which rose by 32 percent from the year-ago level, consisted mainly of PSE-listed shares of US$4.905 billion (70 percent of total), the bulk of which were spread among holding firms and companies in the telecommunication, property and banking sectors. Investments in peso-denominated government securities, mostly FXTNs, in the amount of US$2.052 billion accounted for 29 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 less than 1 percent. These investments were funded with fresh inward remittances of foreign exchange converted into pesos through banks operating in the Philippines, 80 percent (US$5.584 billion) of which originated from Singapore, the United States and the United Kingdom.
Foreign investments in both PSE-listed shares and government securities expanded by 35 percent and 26 percent, respectively, reflecting a further improvement in investor confidence.
Meanwhile, gross capital outflows for the first 11 months of the year rose by 52 percent to US$4.875 billion from the comparative 2005 level of US$3.210 billion due mainly to divestments from listed shares of US$1.711 billion (35 percent of total) and government securities of US$1.955 billion (40 percent). Divestments from money market placements and withdrawals of peso deposits totaling US$1.209 billion made up the balance of 25 percent. The higher capital repatriations this year may be attributed mainly to profit-taking of some foreign investors to take advantage of the appreciation of the peso.