Bangko Sentral-registered foreign portfolio investments posted a net inflow of US$252.52 million in January 2007, in contrast to the US$115.47 million net outflow in January 2006. This development reflected continuing bullish investor sentiment on the country’s economic prospects following evidence of sustained improvement in economic and financial indicators, including the continued slowdown in the inflation rate to 4.3 percent in December, the better-than-expected BOP surplus of US$3.77 billion in 2006, and the reduction in the fiscal deficit to P62.2 billion or half the 2006 program.
Gross inflows of foreign portfolio investments 1 in January aggregated US$1,011.33 million, or four times the US$250.90 million in the same period last year. Around 72 percent of said investments went to shares of stocks listed in the Philippine Stock Exchange (PSE) of US$730.88 million, of which 84 percent were in property, utility, telecommunication and bank stocks. Placements in peso-denominated government securities, mainly Fixed Rate Treasury Notes or FXTNs, of US$280.45 million accounted for the 28 percent balance.
Foreign investments in PSE-listed shares and government securities were more than three times and six times, respectively, of their corresponding levels in January 2006.
The investments were funded by fresh inward remittances of foreign exchange which were converted into pesos through banks operating in the Philippines. Around 74 percent (US$753.34 million) of the funds originated from the United Kingdom, the United States and Singapore.
Meanwhile, capital repatriations posted a year-on-year increase of 107 percent to reach US$758.81 million, due mainly to divestments from listed shares of US$302.05 million (40 percent of total) and government securities of US$317.15 million (42 percent). Withdrawals of peso deposits 2 totaling US$139.61 million accounted for the balance of 18 percent.
1 These statistics, which pertain to newly-registered investments, are different from foreign portfolio investments in the balance of payments which represent actual flows during the period under review.
2 Generally represent temporary placements of sales proceeds from divestments from listed shares and government securities.