Portfolio investments reach $498 million in May

MANILA, Philippines – Portfolio investments made a significant turnaround in May, with over $498 million worth of funds coming into the country compared with the $276-million net outflow in April.

Data from the Bangko Sentral ng Pilipinas (BSP) showed that foreign portfolio investments went hunting for opportunities in the emerging markets and this led to a significant increase in gross inflows in May.

The BSP said registered foreign portfolio investments increased by 125 percent, from $435 million in April to $978 million in May. Total outflows, on the other hand, dropped by 33 percent to $480 million.

The BSP reported that 91 percent of gross portfolio inflows were invested in shares listed at the Philippine Stock Exchange while nine percent went to peso-denominated government securities.

On the other hand, 97 percent of the portfolio funds that flowed out were investments taken out of interim peso deposits or IPDs.

“Investors exhibited confidence in the economy as evidenced by a substantial Japanese investment in the country’s food, beverage and tobacco sector,” said BSP Governor Amando M. Tetangco Jr. “On the global front, confidence in the world economy rose for the third month in a row as job losses in the US continued to slow down and global production improved.”

Tetangco said this reinforced the growing perception that the crisis as bottoming out.

Because of the significant net inflow in May, the year-to-date transactions resulted in a net inflow of $276 million, in contrast to the net outflow of $461 million for the comparable period in 2008.   

Gross investment inflows during the five-month period totaled nearly $2.7 billion during the first five months of 2009. These were 43 percent lower than the $4.7-billion posted last year as investors remained cautious despite the renewed confidence in the economy. 

The BSP reported that investments in PSE-listed shares amounted to $1.9 billion comprised 73 percent of total inflows. These inflows, however, were 35 percent lower than the $3-billion level in 2008. 

The BSP said about 30 percent of these went to food, beverage and tobacco companies, and 28 percent to telecommunication firms. Similarly, combined investments in peso government securities and peso bank deposits with minimum maturity of 90 days dropped to $673 million from last year’s $1.7 billion. 

Meanwhile, placements in money market instruments marginally rose by $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, on the other hand, amounted to $2.4 billion which were 53 percent lower than last year’s $5.1 billion, signaling improving investor sentiment. –Des Ferriols, Philippine Star