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Foreign Portfolio Investments Post Net Outflow in January

02.02.2006

For the first month of the year, transactions in Bangko Sentral-registered foreign portfolio investments showed a net outflow of US$118.5 million, as new registered investments fell short of capital repatriations/outflows. This contrasts to the US$543.5 million net inflow from foreign portfolio investments recorded in January 2005. 

Investor sentiment in the stock market has generally been upbeat as reflected in a net inflow of US$73.8 million from investments in PSE-listed securities in January.  Among others, the much lower-than-programmed fiscal deficit in 2005 and the expected further improvement in fiscal performance mainly from the full implementation of the RVAT, the respectable rate of economic growth in 2005, the low interest rates and the favorable earnings performance of selected companies have provided investors sufficient reasons to be optimistic about the economy’s prospects in 2006.

Meanwhile, investments in peso-denominated government securities posted a net outflow of US$139.2 million as investors took the opportunity to cash in profits from the appreciation of the peso.  In addition, there were no new issues of Treasury notes, the instrument preferred by foreign portfolio investors, due to the liquid cash position of the Bureau of the Treasury. 

Registered foreign portfolio investments* totaled US$228.9 million and consisted of the following:  PSE-listed securities of US$184.3 million (80.5 percent) and placements in peso-denominated Fixed Rate Treasury Notes (FXTNs) of US$44.6 million. These investments were funded with new inward remittances of foreign exchange converted into pesos through banks operating in the Philippines.  By country of origin, the bulk or 78 percent of the new registered investments came from the United States, United Kingdom and Singapore.

Meanwhile, capital repatriations/outflows pertaining to BSP-registered investments amounted to US$347.4 million.  Divestments in government securities comprised US$183.8 million or 53 percent of the total; securities listed in the Philippine Stock Exchange (PSE), US$110.5 million or 32 percent; and withdrawals of peso deposits, US$53.1 million or 15 percent.  Peso deposits withdrawn for outward remittance mainly represented proceeds of earlier divestments from PSE-listed shares and government securities.

On a gross basis, the portfolio investments registered in January 2006 were only a third of the US$680.5 million figure in January 2005 while outflows/capital repatriations pertaining to registered foreign portfolio investments were 2.5 times last year’s US$137.0 million total.

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* These statistics are different from foreign portfolio investments in the balance of payments which represent actual flows during the period under review.

 

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