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Net Foreign Portfolio Investment Inflow Rises in First Semester

07.10.2003

BSP Governor Rafael B. Buenaventura reported today that, for year through June 27, 2003, foreign portfolio investment transactions resulted in a net foreign exchange inflow of US$225.3 million, up by over 15 percent from the US$194.9 million net inflow posted during the comparable period in 2002. The data were based on the weekly reports of the five major custodian banks to the BSP.

A custodian bank refers to a commercial bank or an offshore banking unit (OBU) appointed by the foreign investor to register his investments and to hold shares for and in his behalf and to represent him in all actions in connection with his investments in the Philippines.

“Investments by non-residents in peso bank deposits and in government securities/money market instruments showed net foreign exchange inflows of US$150.5 million and US$99.8 million, respectively. On the other hand, investments in securities listed in the Philippine Stock Exchange (PSE) posted a net foreign exchange outflow of US$25.0 million,” the Governor said.

The largest net inflows were posted during the months of April, May and June (US$50.4 million, US$74.1 million and US$65.8 million, respectively) and were attributed to the better-than-expected outturns on inflation and GDP growth rates and the fiscal position; the drop in interest rates as well as strong first quarter profits of select blue chip firms.

January and March recorded small net inflows of US$19.8 million and US$16.8 million, respectively, while February showed a minimal net outflow of US$1.6 million primarily because of various concerns such as the impact of the US-Iraq conflict, global and domestic terrorism, and the severe acute respiratory syndrome (SARS).

On a gross basis, foreign exchange inflows from portfolio investments during the first semester totaled US$548.6 million while outflows pertaining to withdrawals of investments in these instruments amounted to US$323.3 million.

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