Strong profit prospects of various sectors, the strengthening of the peso and optimism over continuing progress in fiscal sector reforms resulted in a much-improved foreign portfolio investment outturn for the first quarter.
For the period 1 January-1 April 2005, foreign portfolio investment transactions recorded a cumulative net foreign exchange inflow of US$1,525.4 million, about 17 times the US$91.5 million posted during the same period in 2004 and over three times the US$486.8 million net inflow for the whole of 2004.
The data were based on a report covering BSP-registered foreign portfolio investments funded by new inward foreign exchange inflows as well as outflows/capital repatriations pertaining to registered investments during the three-month period. A net foreign exchange inflow results when the total amount of registered foreign portfolio investments exceeds the aggregate amount of capital repatriations.
Under existing rules, registration of foreign investments with the Bangko Sentral is required to enable investors to purchase foreign exchange from the banking system to service the remittance of dividends, profits and earnings on the investments as well as repatriation of sales proceeds from divestments.
Commercial banks have a delegated authority to register, in behalf of the Bangko Sentral, foreign investments in shares listed in the Philippine Stock Exchange (PSE). Investments in other types of instruments are required to be directly registered with the Bangko Sentral.
For the period in review, non-resident investments in securities listed in the Philippine Stock Exchange, government securities and money market instruments posted net foreign exchange inflows of US$1,300.7 million, US$374.7 million and US$7.1 million, respectively. On the other hand, non-resident investments in peso bank deposits (generally temporary placements of sales proceeds of investments in the above portfolio investments) showed a net outflow of US$157.1 million.
On a gross basis, portfolio investments registered during the period totaled US$2,293.8 million, or 3.8 times the figure registered in the same period last year. Meanwhile, withdrawals of foreign portfolio investments totaled US$768.4 million, 50 percent more than last year’s US$510.9 million.