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Foreign Portfolio Investment Net Inflow Sustained in November


November 2007 Flows

Transactions in Bangko Sentral-registered foreign portfolio investments resulted in net inflows of US$51.2 million for the month of November.  The net inflow could be attributed, among others, to the 25 basis points reduction in BSP’s policy rates, the 6.6 percent GDP growth in the third quarter and additional reports of strong third quarter corporate earnings.  The size of the neti nflow was, however, markedly lower than October’s US$274.1 million performance due, among others, to concerns on the widening global credit crunch sparked by the subprime mortgage crisis in the US, soaring oil prices, unfavorable outlook for the US economy, as well as the Batasan and Makati incidents.

On a gross basis, registered foreign portfolio investments1 in November aggregated US$1.3 billion, 62 percent (US$793.8 million) of which pertained to shares listed in the Philippine Stock Exchange (PSE).  Investments in peso-denominated government securities, primarily Fixed Rate Treasury Notes or FXTNs, accounted for 32 percent (US$413.7 million) of registered investments, with placements in peso time deposits comprising the remaining 6 percent (US$73.3 million).  Capital repatriations amounted to more than US$1.2 billion pertaining to the following:  a) divestments from PSE-listed shares (50 percent) and government securities (20 percent); and b) withdrawals of money market placements and peso deposits2 (combined 30 percent share).

January-November 2007 Flows

For the first eleven months of the year, net inflows of over US$3.7 billion were recorded.  This level was 1.8 times the US$2.1 billion net inflow realized for the comparable period in 2006.  Generally sound economic fundamentals helped sustain foreign investor interest.

Gross investment inflows reached US$14.7 billion, more than double the performance for the same period in 2006.  Investments in PSE-listed shares of US$11.8 billion accounted for 80 percent of total, and were 141 percent higher than the figure for 2006.  Close to three-fourths of these investments went to telecommunications, utility, property and holding firms. Peso-denominated government securities, primarily FXTNs, comprised 18 percent (US$2.6 billion) of total investment inflows. The rest pertained to money market instruments and peso bank deposits (combined share of two percent).  The United Kingdom, Singapore and the United States were the top countries of origin of investment inflows during the period.

Meanwhile, gross capital outflows for the period rose to US$10.9 billion or by 124 percent from last year. The outflows arose from divestments from listed shares (47 percent of total) and government securities (20 percent), as well as withdrawals of money market placements and peso deposits (33 percent). 

1These 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.
2Generally represent temporary placements of sales proceeds from divestments from listed shares and government securities.

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