NEWSFLASH

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FOREIGN INVESTORS AWAIT ELECTION OUTCOME

Manila, May 5, 1998 - Foreign investors are holding off making major decisions about the Philippines until after the outcome of the May 11 national elections is known.

Bangko Sentral ng Pilipinas Governor Gabriel Singson says this was what he gathered during a meeting with fund managers in Switzerland, where managers of foreign fund portfolios expressed concern over the outcome of the electoral process and its implications on the country's economic policies.

Singson reported that the managers nevertheless felt that the Philippines is better off than its neighbors. He said the investment decision-makers "acknowledged our constructive policy actions especially in strengthening the banking system."

Foreign fund investments slowed down as the election nears, and has affected the foreign exchange market because of the "hedging" of some investors who are keeping liquid in dollars until after the election.

Foreign exchange traders explain that depending on the outcome of the elections, the investors may unload their dollars and start reinvesting, which could result in an appreciation of the peso.

They fear that any election-related troubles or an outcome that is not what investors favor could lead to massive capital flight, with foreign investors taking their dollars elsewhere.

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