More on Phillipines investment...
Net ‘hot money’ falls 66% in Q1
By Des Ferriols
The Philippine Star 04/11/2006
Net foreign portfolio investment or ‘hot money’ declined by 66 percent to $489.7 million in the first three months of the year from $1.44 billion in the same period last year, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.
Foreign investments in stocks also fell this quarter "because of lack of initial public offerings unlike last year," BSP Deputy Governor Diwa Guinigundo said yesterday.
For March alone, foreign portfolio investment dropped 84 percent as the strong peso encouraged the sale of assets denominated in the local currency.
The difference between funds flowing into and out of the country declined to $91.9 million in March from $562.1 million a year ago. This was a reversal from the 54-percent increase posted in February.
"The decline was traced partly to the inclusion in the first-quarter 2005 report of substantial investments in shares that were made in previous years but which were registered with the central bank only in March 2005," the BSP said.
According to the BSP, the market was also particularly brisk this time last year due to the initial public offering of Manila Water Co and SM Investments Corp. SM Investment Corp., the holding company of retail tycoon Henry Sy, raised about P28.8 billion in the first quarter of 2005.
This year, the only activity in the market was the IPO of First Gen Corp and the additional stock offer of the Gokongwei-owned Universal Robina Corp.
According to the BSP, other factors that contributed to the net inflow in March included the continuing strength of the peso and OFW remittances and the extension of the Special Purpose Vehicle Law which would further reduce the non-performing assets of banks.
The BSP said the record earnings of a number of listed firms also attracted more portfolio investments as well as the government’s report that its actual deficit budgetary deficit in February was again significantly below the programmed level.
Investment into the Philippines has helped boost the country’s foreign exchange reserves. These reached a record $20.84 billion in March on the back of the government’s $2.1 billion overseas debt sales in January and higher remittances from Filipinos working overseas.
Investors are selling Philippine assets and buying US dollars, as the strength of the peso is increasing returns, the central bank said.
By country of origin, the BSP said over 81 percent of the new registered investments came from the United States, Singapore and the United Kingdom.
However, foreign investments in PSE-listed shares fell by 31 percent (US$ 498.1 million) from the first quarter of last year.
"The decline was traced partly to the inclusion in the first quarter 2005 report of substantial investments in shares that were made in previous years but which were registered with the BSP only in March 2005," the BSP explained.
Meanwhile, capital repatriations/outflows pertaining to BSP-registered investments amounted to $978.1 million during the quarter.
Divestments in government securities comprised $419.5 million or 43 percent of the total; securities listed in the Philippine Stock Exchange (PSE), $412.7 million or 42 percent; and withdrawals of peso deposits, $145.9 million or 15 percent.
