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Foreign Portfolio Investment Transactions in May Result in a Net Inflow

06.11.2009

May 2009 Transactions
 
Transactions pertaining to foreign portfolio investments registered with the Bangko Sentral   yielded a net inflow of US$498 million in May, a major turn around from the US$276 million net outflow in April. “Investors exhibited confidence in the economy as evidenced by a substantial Japanese investment in the country’s food, beverage and tobacco sector. On the global front, confidence in the world economy rose for the third month in a row as job losses in the U.S. continued to slow down and global production improved, reinforcing the growing perception that the crisis is bottoming out”, Bangko Sentral Governor Amando M. Tetangco, Jr. said.

Registration of inward foreign investments with the Bangko Sentral is voluntary. It entitles the investor to buy foreign exchange from authorized agent banks or their subsidiary/affiliate foreign exchange corporations for repatriation of capital and remittance of dividends/earnings that accrue on the registered investment.

Registered foreign portfolio investmentsa  increased by 125 percent, from US$435 million to US$978 million, 91 percent of which were invested in PSE-listed shares while 9 percent went to peso-denominated government securities (peso GS). Total outflows dropped by 33 percent to US$480 million, 97 percent of which were withdrawals from interim peso deposits or IPDs b.

January-May 2009 Transactions

Year-to-date transactions resulted in a net inflow of US$276 million, in contrast to the net outflow of US$461 million for the comparable period in 2008.   

Gross investment inflows totaled nearly US$2.7 billion during the first five months of 2009.  These were 43 percent lower than the almost   US$4.7 billion posted last year as investors remained cautious despite the renewed confidence in the economy.  Investments in PSE-listed shares of US$1.9 billion comprised 73 percent of total inflows, and were 35 percent lower than the US$3.0 billion level in 2008.  About 30 percent of these went to food, beverage and tobacco companies, and 28 percent to telecommunication firms. Similarly, combined investments in peso GS and peso bank deposits with minimum maturity of 90 days dropped to US$673 million from last year’s US$1.7 billion.  Meanwhile, placements in money market instruments marginally rose by US$49 million. The United States, Japan, the United Kingdom, Singapore and the Netherlands were the top investor countries and collectively contributed 84 percent of total investments during the period.

Gross investment outflows of US$2.4 billion were 53 percent lower than last year’s US$5.1 billion, signaling improving investor sentiment.

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a  These statistics, which pertain to newly registered investments, are different from foreign portfolio investments in the balance of payments which represent the amount of foreign exchange inflows converted to pesos for investment purposes during the period under review.

b  Interim peso deposit is a temporary deposit account maintained by the foreign investor where sales proceeds of earlier BSP-registered investments are temporarily parked pending subsequent reinvestment or repatriation offshore.

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