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Net Foreign Portfolio Investments Post Higher Gains in April

05.17.2007

April 2007 Flows

Bangko Sentral-registered foreign portfolio investments posted a net inflow of US$243.10 million in April, up by 40 percent from US$173.21 million in March.

Reports of solid 2006 earnings of several blue chip companies and positive macroeconomic developments further lifted investor sentiment during the month.  The inflation rate further decelerated to a 20-year low of 2.2 percent in March while the peso continued to appreciate, breaking into the P47/US$1 territory in the first half of the month. Goods exports and OFW remittances for the first two months of the year also posted year-on-year increases of 14.7 percent and 22.6 percent, respectively, contributing to the increase in the country’s gross international reserves to US$24.7 billion at end- March. 

On a gross basis, registered foreign portfolio investments  in April aggregated US$931.76 million, 80 percent of which (US$748.19 million) were in shares listed in the Philippine Stock Exchange (PSE), mainly in telecommunication and property firms.  Placements in peso-denominated government securities, primarily Fixed Rate Treasury Notes or FXTNs, accounted for the 20 percent balance (US$183.57 million).

These inflows more than offset capital repatriations/outflows of US$688.66 million, which were traced to: a) divestments from PSE-listed shares of US$348.88 million (51 percent of total) and government securities of US$68.46 million (10 percent); and b) withdrawals of money market placements of US$0.08 million and peso deposits  of US$271.24 million, which had a combined 39 percent share.

January-April 2007 Flows

For the first four months of the year, newly registered foreign portfolio investments and capital repatriations/outflows totaled US$4.446 billion and US$3.365 billion, respectively, for a net inflow of US$1.081 billion.  This net inflow was 83 percent more than the US$592 million net inflow in the same period in 2006. 

Gross investment inflows, which rose by 127 percent from the year-ago level of US$1.960 billion, went primarily to PSE-listed shares of US$3.551 billion (80 percent of total), US$3.172 billion of which were distributed among property, telecommunication, holding and utility firms and banks. Investments in peso-denominated government securities, mostly FXTNs, accounted for 18 percent, while investments in money market instruments and peso bank deposits had a combined share of 2 percent.  These investments were funded by fresh inward remittances of foreign exchange converted into pesos through banks operating in the Philippines.   US$2.649 billion or 60 percent of these remittances originated from the United Kingdom, United States and Singapore.

Foreign investments in PSE-listed shares and government securities were 2.3 times and 1.9 times their corresponding levels in 2006.

Meanwhile, gross capital outflows for the same four-month period expanded by 146 percent from US$1.369 billion in 2006. The outflows represented divestments from listed shares of US$1.532 billion (46 percent of total) and government securities (25 percent); and withdrawals of money market placements and peso deposits (29 percent).  The substantial increase in capital repatriations this year may be largely attributed to the continued appreciation of the peso, which has resulted in foreign exchange gains for investors.

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