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Foreign Portfolio Investments Post Higher Net Inflows in August

09.11.2008

August 2008 Flows
Bangko Sentral Governor Amando M. Tetangco, Jr. reported that net inflows of foreign portfolio investments registered with the Bangko Sentral in August 2008 amounted to US$187.5 million, substantially higher than the US$20.2 million level in July.  “The softening of global oil prices was a major contributory factor to the more favorable investor sentiment during the month.  Strong first-semester earnings results of several corporations have also positively influenced foreign investors,” the Governor said. 

Registration of foreign investments with the Bangko Sentral entitles the investor to buy foreign exchange from the banking system for capital repatriation and remittance of dividends/earnings that accrue on the investments.

On a gross basis, registered foreign portfolio investments  aggregated US$740.5 million, 72 percent of which went to shares listed in the Philippine Stock Exchange (PSE). Investments in peso-denominated government securities and in peso-bank deposits accounted for 26 percent and 2 percent, respectively.  On the other hand, capital repatriations totaled US$553.0 million and were traced to withdrawals of investments in (a) PSE-listed shares (42 percent); (b) government securities (22 percent); and (c) peso bank deposits  and money market instruments (for a combined 36 percent).

January-August 2008 Flows
For the first eight months of the year, transactions resulted in outflows of US$209.5 million, in contrast to the nearly US$3.4 billion net inflow for the comparable period in 2007.  Concerns about the state of the global economy, particularly the U.S., have made investors more risk averse.  By type of instrument, investments in PSE-listed shares,  peso-denominated government securities, and money market instruments posted net inflows of over US$1.6 billion, US$72.3 million, and US$2.6 million, respectively, while placements in peso bank deposits showed a net outflow of US$1.9 billion.

Gross investment inflows reached close to US$6.6 billion during the period. This was 58 percent of the US$11.2 billion recorded for the same period last year.  Placements in PSE-listed shares of over US$4.4 billion (47 percent of which went to telecommunications and property firms) represented only 68 percent of the total and were less than half the US$9.3 billion posted in 2007. Investments in peso-denominated government securities of almost US$1.6 billion (24 percent) were 12 percent lower than last year’s total of US$1.8 billion. Meanwhile, investments in bank deposits rose significantly by 294 percent to US$559.2 million to account for an 8 percent share of total investment flows.  Placements in money market instruments made up less than 1 percent.  The United Kingdom, Singapore and the United States were the top three investor countries, contributing 68 percent of investment funds during the period.

Meanwhile, gross capital outflows amounted to US$6.8 billion,14 percent lower than the 2007 level of nearly US$7.9 billion. These outflows took the form of withdrawals of investments from listed shares (41 percent of total), government securities (22 percent), money market instruments, and peso bank deposits (for  a combined 37 percent). 

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