May 2007 Flows
Bangko Sentral-registered foreign portfolio investments posted a net inflow of US$592.0 million in May, 144 percent more than the US$243.1 million in April and the highest monthly total this year to date.
The bullish investor sentiment was sustained by encouraging developments, foremost of which were the generally peaceful elections, the continued strengthening of the peso, the 6.9 percent GDP growth in the first quarter, and the P12 billion fiscal surplus in April. Reports of strong first quarter performance of several big corporates also had a positive effect on investors.
On a gross basis, registered foreign portfolio investments in May aggregated US$1.4 billion, 73 percent of which (US$1.1 billion) were in shares listed in the Philippine Stock Exchange (PSE), mainly in banks and property firms. Placements in peso-denominated government securities, primarily Fixed Rate Treasury Notes or FXTNs, accounted for US$356.6 million or 25 percent, while placements in peso time deposits made up the remaining US$26.8 million (2 percent). These inflows more than offset capital repatriations/outflows of US$851.5 million, which pertained to:
a) divestments from PSE-listed shares of US$459.9 million (54 percent of total) and government securities of US$187.1 million (22 percent); and
b) withdrawals of peso deposits of US$204.5 million (24 percent).
January-May 2007 Flows
For the first five months of the year, newly-registered foreign portfolio investments and capital repatriations/outflows totaled US$5.9 billion and US$4.2 billion, respectively, for a net inflow of US$1.7 billion. This net inflow was over two and half times the US$664.7 million net inflow in the same period in 2006.
Gross investment inflows, which rose by 115 percent from the year-ago level of US$2.7 billion, went primarily to PSE-listed shares of US$4.6 billion (78 percent of total), distributed mainly among property, telecommunication, holding and utility firms and banks. Investments in peso-denominated government securities, mostly FXTNs, accounted for US$1.2 billion or 20 percent, while investments in money market instruments and peso bank deposits had a combined share of only 2 percent. These investments were funded by fresh inward remittances of foreign exchange converted into pesos through banks operating in the country. About US$3.7 billion or 62 percent of these remittances originated from the United Kingdom, United States and Singapore.
Foreign investments in PSE-listed shares and government securities were 2.2 times and 1.8 times their corresponding levels in 2006.
Meanwhile, gross capital outflows for the same five-month period grew by 103 percent from US$2.1 billion in 2006. The outflows represented divestments from listed shares of US$2 billion (48 percent of total) and government securities (US$1.0 billion or 24 percent); and withdrawals of money market placements and peso deposits (28 percent). The continued appreciation of the peso has resulted in substantial foreign exchange gains for investors, with peso divestment proceeds fetching a higher equivalent in foreign exchange for repatriation purposes.