July 2007 Flows
Net inflows from Bangko Sentral-registered foreign portfolio investments reached nearly US$1.1 billion in July 2007 due mainly to several large initial and follow-on offers. These stock offerings include those of Aboitiz Power Corporation, GMA Holdings, Inc. and Vista Land and Lifescapes, Inc. The Philippine National Oil Company likewise offered an additional 20 percent of its shareholdings in PNOC-Energy Development Corporation. The easing of inflation to 2.3 percent in June from 2.4 percent in May and BSP’s twin moves adjusting its key policy rates downward and removing the tiering system on bank placements also helped sustain foreign investor interest. These inflows also defied news on the government’s ability to meet its fiscal targets for the year and the huge losses in Wall Street caused by housing and credit market concerns.
On a gross basis, registered foreign portfolio investments1 in July aggregated about US$2.1 billion, 95 percent of which were in shares listed in the Philippine Stock Exchange (PSE) and 5 percent in peso-denominated government securities, primarily Fixed Rate Treasury Notes or FXTNs. Property and utility firms were the main recipients of 72 percent of the investments in listed shares. These inflows exceeded capital repatriations of US$1.0 billion, distributed, as follows: a) divestments from PSE-listed shares, 54 percent; b) divestments from government securities, 8 percent; and c) withdrawals of peso deposits2 , 38 percent.
January-July 2007 Flows
For the first seven months of the year, newly-registered foreign portfolio investments and capital repatriations/outflows totaled US$9.8 billion and US$6.2 billion, respectively, for a net inflow of over US$3.6 billion. This net inflow was four times the US$894.9 million net inflow for the comparable period in 2006 and reflects the general optimism of foreign investors relative to the country’s economy.
Gross investment inflows went primarily to PSE-listed shares of US$8.1 billion (82 percent of total), three-fourths of which went to property, telecommunication, utility and holding firms. Peso-denominated government securities, mostly FXTNs, accounted for over US$1.5 billion or 16 percent of the investment inflows, while money market instruments and peso bank deposits had a combined share of only 2 percent. About 66 percent of these remittances originated from the United Kingdom, the United States and Singapore.
Foreign investments in PSE-listed shares and government securities were 3.1 times and 1.2 times their corresponding levels in 2006.
Meanwhile, gross capital outflows for the semester more than doubled year-on-year as the appreciation of the peso made it attractive for foreign investors to cash in and repatriate their gains. The outflows arose from divestments from listed shares (48 percent of total), and government securities (23 percent); and withdrawals of money market placements and peso deposits (29 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.