Net hot money inflow up 12%

By Des Ferriols
The Philippine Star 09/09/2006

 

Foreign investment in Philippines stocks, bonds and other financial instruments stood at $131.5 million in August, up 12.3 percent from July, the Bangko Sentral ng Pilipinas reported yesterday.

The bank said total net portfolio inflows for the first eight months of the year totalled $1.02 billion.

The BSP said the figures reflect growing confidence among foreign investors in the economy, bolstered by easing inflation, double-digit growth in exports and healthy corporate earnings.

"However, recurrent concerns that the US Federal Reserve may resume increases in its interest rates, volatile crude oil prices and the national government’s budget deficit of P17 billion in July after three consecutive months of surpluses may have limited the increase in the net inflow," the statement said.

The BSP said about 65 percent of the registered foreign portfolio investments in August went to the local stock market.

Investments in government securities and peso bank deposits accounted for the balance of 35 percent, the BSP said.

In August last year, inflow was not much higher, amounting to $329.7 million. This year, however, total outflow amounted to $193.8 million, arising mainly from divestments from listed shares ($113.5 million) and from government securities ($36.6 million).

During the first eight months of the year, total capital repatriations/outflows totaled $3.187 billion, about 34 percent higher than last year’s capital outflow which amounted to only $2.381 billion.

The BSP said the outflow reflected divestments from government securities of $1.457 billion (46 percent of total), up by 92 percent from the year-ago level. Divestments from listed shares of $1.103 billion accounted for 35 percent of total outflows and were seven percent higher than last year’s figure.

On the other hand, withdrawals of peso deposits amounting to $626.2 million (generally proceeds of earlier divestments from PSE-listed shares and government securities) and of money market placements of $0.2 million made up the balance of 20 percent of capital repatriations, up by six percent from the corresponding level last year.

On a gross basis, the BSP reported that the bulk (67 percent) of the investments consisted of PSE-listed shares of $2.809 billion, mainly shares in telecommunication, property and banking firms.

On the other hand, investments in peso-denominated government securities, mostly FXTNs, in the amount of $1.372 billion made up 33 percent, while investments in money market instruments of $27.9 million and peso bank deposits of $1.1 million had a combined share of one percent.

"The registered investments were funded with fresh inward remittances of foreign exchange converted into pesos through banks operating in the Philippines," the BSP said.

About 81 percent ($3.425 billion) of this, according to the BSP, came from Singapore, the United States and the United Kingdom. — with AFP

 

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