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Foreign Portfolio Investments Post Net Outflow in June

07.18.2008

June 2008 Flows

Transactions in Bangko Sentral-registered foreign portfolio investments in June posted a net outflow of US$145.6 million, lower than the US$158.1 million net outflow in May. Continued risk aversion, record high oil prices, the acceleration of inflation to a nine-year high of 9.6 percent in May kept investors cautious during the period.

On a gross basis, registered foreign portfolio investments 1  in June aggregated US$589.6 million, 79 percent of which went to shares   listed   in   the  Philippine  Stock  Exchange   (PSE).   Investments  in peso-denominated government securities accounted for the 21 percent balance.  On the other hand, capital repatriations totaled US$735.2 million and came from withdrawals of investments in (a) PSE-listed shares (38 percent);  (b) government securities (19 percent); and (c) peso bank deposits 2  (43 percent).

January-June 2008 Flows

For the first semester of the year, transactions resulted in a net outflow of US$417.4 million versus the nearly US$2.6 billion net inflow for the comparable period in 2007.  This reflected continuing risk aversion due to the expected global economic slowdown and credit crisis as well as reduced corporate earnings resulting from surging oil and other commodity prices.  By type of instrument, investments in PSE-listed shares posted a net inflow of nearly US$1.2 billion, while placements in government securities and peso bank deposits showed net outflows of US$28.6 million and US$1.6 billion, respectively.
  
Gross investment inflows totaled over US$5.2 billion during the period, only about 67 percent of the close to US$7.8 billion total recorded for the same period in 2007.  Investments in PSE-listed shares of more than US$3.4 billion (61 percent of which went to telecommunications, property and holding firms) accounted for 66 percent of the total and were 56 percent of the almost US$6.2 billion level last year. Investments in peso-denominated government securities of nearly US$1.3 billion (24 percent) also fell by 15 percent from last year.  On the other hand, placements in bank deposits   rose  by   285   percent  to  US$546.7  million  to  account  for a 10 percent share of total investment flows.  The United Kingdom, United States and Singapore remained the top three investor countries and collectively contributed 67 percent of investment funds during the first semester.

Meanwhile, gross capital outflows expanded by 8 percent year-on-year to US$5.7 billion and came from proceeds of withdrawals of investments from listed shares (40 percent of total), government securities (23 percent), and peso bank deposits (37 percent). 

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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  Largely represent temporary placements of sales proceeds from divestments from listed shares and government securities.

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