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Foreign Portfolio Investments Post Record High US$871 million Net Inflow in June

07.13.2007

June 2007 Flows

Bangko Sentral-registered foreign portfolio investments posted a record high net inflow of US$870.8 million in June 2007, which surpassed the previous highest monthly total of US$580.8 million in May.

On a gross basis, registered foreign portfolio investments 1  in June aggregated about US$1.9 billion, 82 percent or close to US$1.6 billion of which were in shares listed in the Philippine Stock Exchange (PSE).  Holding and property firms and banks captured 73 percent of said investments in listed shares.  Placements in peso-denominated government securities, primarily Fixed Rate Treasury Notes or FXTNs, accounted for  US$294.3 million or 16 percent of registered investments, while placements in peso time deposits made up the remaining US$38.0 million (2 percent). These inflows more than offset capital repatriations/outflows of US$1.0 billion, which arose from: a) divestments from PSE-listed shares of US$480.2 million (47 percent of total); b) divestments from government securities of US$290.8 million (29 percent); and c) withdrawals of money market instruments and peso deposits  2 of US$249.4 million (24 percent).

These strong investment flows during the month of June came about with the sustained positive market sentiment following robust corporate profits, appreciating peso and generally sound macroeconomic fundamentals. A large follow-on offering also attracted investments into the stock market.

January-June 2007 Flows

For the first semester of the year, newly-registered foreign portfolio investments and capital repatriations/outflows totaled US$7.8 billion and US$5.2 billion, respectively, for a net inflow of over US$2.5 billion.  This net inflow was 3.3 times the US$773.8 million net inflow for the first semester of 2006. 

Gross investment inflows, which rose by 131 percent from the year-ago level of nearly US$3.4 billion, went primarily to PSE-listed shares of US$6.2 billion (79 percent of total), distributed mainly among telecommunication, holding, utility and property firms. This reflects continued confidence in the economy, helped by the generally peaceful electoral exercise as well as the series of large stock rights and follow-on offerings during the semester. Peso-denominated government securities, mostly FXTNs, accounted for over US$1.4 billion or 19 percent of the investment inflows, while money market instruments and peso bank deposits aggregating US$170.2 million 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$5.07 billion or 64 percent of these remittances were sourced from the United Kingdom, the United States and Singapore.

Foreign investments in PSE-listed shares and government securities were 2.6 times and 1.5 times their corresponding levels in 2006.

Meanwhile, gross capital outflows for the semester increased by  102 percent from US$2.6 billion in 2006. The outflows represented divestments from listed shares of US$2.5 billion (47 percent of total) and government securities (US$1.3 billion or 25 percent); and withdrawals of money market placements and peso deposits (28 percent).  The rise in these outflows may be attributed to a great extent to profit-taking activities of foreign investors to gain from the continued appreciation of the peso.

 


 

 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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