Lured by ‘favorable’ economic data, foreign funds return to RP

FOREIGNERS have started buying shares of listed Philippine companies and other peso-denominated financial assets in March due to the country’s favorable economic data. In a statement, Bangko Sentral ng Pilipinas (BSP) said net foreign portfolio investments—which is incoming less outgoing foreign money—posted a net inflow of $32.2 million in March from the $198.7-million net outflow in February.

“Gains in Wall Street following the US government’s plan to buy up to $1 trillion in toxic assets from banks to spur economic recovery and favorable economic reports contributed significantly to the positive outcome during the month,” BSP Governor Amando M. Tetangco Jr. said.

The central bank official added that selective buying of shares of key blue chip companies—including those that reported positive earnings last year—and the central bank’s additional 25-basis point cut in key policy rates also helped boost investor confidence.

On a gross basis, registered foreign portfolio investments reached $559.3 million, 54 percent, or $301.6 million of which went to listed shares, 38 percent, or $211.5 million to peso-denominated government securities and the remainder went to money market instruments.

Foreign funds going out of the country, however, reached an aggregate $527.2 million and these were withdrawals of investments in listed shares worth $10.5 million, government debt paper worth $600 million and bank deposits of $513.7 million.

For the first quarter of the year, transactions also resulted in a net inflow of $54.8 million from $129.8-million net outflow in the same period last year.

By type of instrument, investments in listed shares, peso government securities and money market instruments posted net inflows of $681 million, $396.9 million and $46.1 million, respectively. Placements in peso bank deposits showed a net outflow of close to $1.1 billion.

Gross capital outflows reached an aggregate $1.2 billion, a 62-percent drop from $3.2 billion a year ago.

Of the total, 89 percent was comprised of money market instruments and peso bank deposits, 8 percent was in the form of withdrawals of investments from listed shares, 2 percent in government debt papers while remittances of cash dividends, profits and earnings were less than a percent.  –Chino S. Leyco, Reporter, Manila Times