FOREIGN MONEY OUTFLOWS SOAR TO $272 M
MANILA, JUNE 18, 2008 (STAR) By Des Ferriols - Foreign hot money flew out of the country in even larger amounts, with total outflows soaring to $272 million in the first five months compared to the $1.7-billion net inflow over the same period last year.
Despite its strong fundamentals, the country was not spared from the global stampede that sent stock prices falling in the wake of record-high oil prices and the unresolved credit crunch in the US.
Monetary officials said the worsening anxiety of foreign fund managers over prospects in emerging markets led to even bigger withdrawals of portfolio investments in May.
The Bangko Sentral ng Pilipinas (BSP) reported that registered foreign portfolio investments in May alone posted a net outflow of $158.1 million, higher than the $49.9-million net outflow in April.
BSP governor Amando Tetangco said the continued rise of oil and other commodity prices, the slowdown in economic growth and reports of mixed corporate earnings results in the first quarter, as well as the weakening of the peso contributed to the negative investor sentiment during the period.
On a gross basis, registered foreign portfolio investments in May amounted to $700.4 million, 91 percent (or $634.8 million) of which went to shares listed in the Philippine Stock Exchange (PSE).
Investments in peso-denominated government securities and placements in peso time deposits collectively accounted for the nine percent balance.
However, the May inflows were nearly enough to offset the total outflows in May which amounted to $858.4 million, leaving a net outflow of $158.1 million.
The BSP said the outflow reflected dumping of foreign portfolio investments in PSE-listed shares (45 percent of outflows), government securities (21 percent), and peso bank deposits (34 percent).
The May results brought the cumulative total outflow for January-May to $271.8 million, reversing the $1.7-billion net inflow for the comparable period in 2007.
“This development was brought about by risk aversion following the slowdown in the US and other major economies, the global credit crunch and the record high oil and other commodity prices which dampened expectations on corporate earnings,” Tetangco said.
By type of instrument, investments in PSE-listed shares posted a net inflow of $973.8 million during the five-month period. But placements in government securities and peso bank deposits registered net outflows of $12.0 million and $1.2 billion, respectively.
For the January to May period, the BSP said gross investment inflows amounted to nearly $4.7 billion, down 21 percent from the $5.9 billion total recorded for the same period in 2007.
Investments in PSE-listed shares of almost $3.0 billion (almost half of which went to telecommunications and property firms) accounted for 64 percent of the total and represented only 65 percent of the $4.6 billion level last year.
Investments in peso-denominated government securities of a little over $1.1 billion (24 percent) also lagged behind last year’s total by about 4 percent.
On the other hand, placements in bank deposits increased by 425 percent to $546.7 million to account for 12 percent of total investment flows.
The United Kingdom, Singapore and the United States were the top three countries that invested, contributing 65 percent of investment funds during the five-month period.
But outflows were larger this year by 17 percent and amounted to $4.9 billion and came from proceeds of withdrawals of investments from listed shares (41 percent of total), government securities (23 percent), and peso bank deposits (36 percent).
Chief News Editor: Sol Jose Vanzi
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