Latest Stories

Foreign portfolio investments surged in November

Regulator prepared to counter threat of rising capital inflows


PORTFOLIO investments to the Philippines surged in November due to favorable sentiment brought on by the economy’s robust performance.

Officials said the Philippines, like a few other emerging markets in Asia, has become the preferred site for foreign investors.

The Bangko Sentral ng Pilipinas reported on Friday that net inflow of foreign portfolio investments amounted to $1.01 billion in November.

This was the highest net inflow in about two years, and was more than double the $490.35 million recorded in the same month last year.

Gross inflows reached $2 billion compared with the $1.3 billion a year ago.

The inflows came mostly from the United States, the United Kingdom, Singapore, Luxembourg and Switzerland.

According to the BSP, the increase in foreign portfolio investments was due partly to the surprising growth rate of the Philippine economy and the increase in corporate earnings.

The economy grew by 6.5 percent in the first three quarters of the year, one of the fastest growth rates during the period.

Wary of the threat posed by rising foreign portfolio investments, the BSP is set to implement measures to deal with any potential surge in 2013.

The BSP said “macro-prudential measures” would be more effective and practical than slashing interest rates in addressing a steep rise in foreign portfolio investments.

Macro-prudential measures are bank regulations that ensure stability of financial markets. One such measure is the imposition of higher capital requirement on banks’ holdings of non-deliverable forwards (NDFs), which the BSP enforced earlier this year.

NDFs are hedging instruments that enable enterprises—mainly exporters and importers—to avoid losses arising from foreign-exchange fluctuations. Regulators, however, believe these instruments are being used by banks and their clients in currency speculation.

During a meeting last Thursday, the central bank’s Monetary Board decided to keep its key policy rates steady.

But BSP Deputy Governor Diwa Guinigundo said the move should not be taken as a signal that the central bank does not see any threat of a surge in foreign capital inflows nor does it consider such an event to be unimportant.

According to Guinigundo, the BSP is actually prepared to deal with an excessive rise in foreign portfolio investments, but the action it will take will not involve adjustments in interest rates.

“We believe capital flows continue to be an important issue,” the central bank official told reporters. “We see a threat of [a surge in] capital flows, but macro-prudential measures will be more effective and more applicable in dealing with the impact of such flows.”

He also said other central banks are now using bank regulations to temper the effects of excessive inflows, especially those that involve currency speculation.

Follow Us

Follow us on Facebook Follow on Twitter Follow on Twitter

Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: Business , Foreign portfolio investments

Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94


  • Title of new Hillary Clinton book: ‘Hard Choices’
  • Filipinos, Dutch re-enact crucifixion of Christ
  • 14 killed in car bombing in Homs
  • 57-nation group plays key Ukraine monitoring role
  • French President Hollande’s top aide resigns
  • Sports

  • Nadal ousted by Ferrer in Monte Carlo quarters
  • Pacquiao shorts in Bradley fight sold for P1.7M in LA auction
  • Ryu pitches Dodgers past Giants
  • Alonso sets the pace in Chinese GP practice
  • Heat seek Three-peat but Spurs, Pacers top seeds
  • Lifestyle

  • Levine designs womenswear with help from fiancee
  • Gabriel Garcia Marquez, Nobel laureate, dies at 87
  • Ford Mustang turns 50 atop Empire State Building
  • Pro visual artists, lensmen to judge Pagcor’s photo contest
  • ‘Labahita a la bacalao’
  • Entertainment

  • EXO postpones release of mini album ‘Overdose’
  • ‘X-men’ filmmaker slams ‘fabricated’ sex attack claims
  • Singer Chris Brown’s bodyguard on trial in DC
  • Whoopi Goldberg debuts as marijuana columnist
  • ‘X-men’ director accused of sex assault on teen boy
  • Business

  • Italy sells luxury state cars on eBay
  • Asian shares mostly up in quiet trade
  • Dollar up in Asia on US jobs data, Ukraine deal
  • Barbie doll has a problem
  • Oil prices mixed ahead of long Easter weekend
  • Technology

  • Nasa’s moon-orbiting robot crashes down
  • Netizens pay respects to Gabriel Garcia Marquez
  • Nokia recalls 30,000 chargers for Lumia 2520 tablet
  • Facebook rolls out ‘nearby friends’ feature
  • Netizens seethe over Aquino’s ‘sacrifice’ message
  • Opinion

  • Editorial cartoon, April 17, 2014
  • A humbler Church
  • Deepest darkness
  • ‘Agnihotra’ for Earth’s health
  • It’s the Holy Week, time to think of others
  • Global Nation

  • Filipina accomplice arrested for fake bills in Malaysia
  • DoH denies Filipino nurse no longer positive for MERS virus
  • WHO warns vs spread of MERS-Cov, urges vigilance in taking precautions
  • Last call for nominations to ’14 Presidential Awards
  • San Francisco business coalition slams proposed tax on sugary drinks
  • Marketplace