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Foreign Portfolio Investments Sustain Net Inflow in March

04.12.2007

March 2007 Flows

For the month of March 2007, the net inflow from Bangko Sentral-registered foreign portfolio investments amounted to US$173.21 million.  The net weekly outflows in the first half of the month, which resulted from huge global equities sell-offs triggered by losses suffered by the China and US stock markets, were more than offset by the net weekly inflows in the second half. Contributing to the positive investor sentiment and limiting the losses in the stock market after the sell-offs were positive reports on various areas of the economy.  Inflation slowed to 2.6 percent in February while the budget deficit declined to P18.6 billion in the first two months of the year vis-à-vis P40.4 billion last year (after a surplus of P11.1 billion was recorded in February).  In January, a trade surplus was recorded, the first in 11 months.  In addition, OFW remittances posted a 20 percent increase over January 2006.

Gross inflows of registered foreign portfolio investments 1 in March aggregated US$1.254 billion, of which a large portion (US$969.56 million or 77 percent) consisted of shares listed in the Philippine Stock Exchange (PSE), mainly in property, telecommunication and transportation services companies and banks.  Government securities, primarily Fixed Rate Treasury Notes or FXTNs accounted for US$269.00 million (22 percent), while placements in money market instruments and peso bank deposits made up the remaining US$15.16 million (1 percent).  These inflows exceeded capital repatriations/outflows of US$1.081 billion, which pertained to: a) divestments from listed shares of US$447.68 million (41 percent of total) and government securities of US$308.04 million (29 percent); and b) withdrawals of money market placements of US$4.63 million and peso deposits 2 of US$320.16 million (combined 30 percent share).


January-March 2007 Flows

For the first quarter of the year, gross foreign portfolio investments and capital repatriations/outflows totaled US$3.514 billion and US$2.676 billion, respectively, for a net inflow of US$838 million.  Said net inflow was 71 percent more than the US$490 million net inflow in the same period in 2006. 

Gross investment inflows, which rose by 139 percent from the  year-ago level, went primarily into PSE-listed shares of US$2.803 billion (80 percent of total), US$1.734 billion of which were captured by firms in the property, telecommunication and banking sectors.  Investments in  peso-denominated government securities, mostly FXTNs, in the amount of US$606.13 million accounted for 17 percent, while investments in money market instruments of US$1.27 million and peso bank deposits of US$104.07 million had a combined share of 3 percent.  These investments were funded by fresh inward remittances of foreign exchange converted into pesos through banks operating in the Philippines.  US$2.116 billion or 60 percent of these remittances came from the United Kingdom, the United States and Singapore.  
Foreign investments in PSE-listed shares and government securities were 2.5 times and 1.8 times their corresponding levels in 2006.

Meanwhile, gross capital outflows grew by 174 percent from US$977.94 million in 2006 because of divestments from listed shares of US$1.183 billion (44 percent of total) and government securities of US$774.34 million (29 percent); and withdrawals of money market placements and peso deposits totaling US$718.36 million (27 percent).    Profit-taking opportunities arising from the appreciation of the peso were largely responsible for the increase in capital repatriations this year.    

 


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.

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