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


  • Napoles tags over 100 officials in pork scam – Lacson
  • Vitangcol to sue Czech envoy
  • Senator’s kickback from pork bigger than those of Enrile, Estrada, Revilla – Lacson
  • 43 out of 414 Etihad passengers yet to be found, tested for MERS-CoV – Palace
  • Sandigan junks Marcos family claim to Paoay property
  • Sports

  • Caguioa blasts ‘no heart, soft’ Ginebra on Twitter
  • San Mig Coffee grinds out win over Alaska to force decider
  • UP nips St. Benilde; Adamson blasts RTU in Filoil women’s caging
  • Kevin Garnett responds to Raptors’ GM F word
  • Albert Pujols hits 500th HR of major league career
  • Lifestyle

  • Entering the monkhood a rite of passage
  • Haneda International Airport: A destination on its own
  • Wanted: Beauty queen with a heart that beats for the environment
  • Kim Atienza: At home with art and design
  • Life lessons I want to teach my son
  • Entertainment

  • Bollywood Oscars, film stars come to Florida
  • Ex-Fox exec denies allegations in sex abuse suit
  • Kris Aquino backtracks, says Herbert Bautista and her are ‘best friends’
  • Summer preview: Chris Pratt enters a new ‘Galaxy’
  • Bon Jovi helps open low-income housing in US
  • Business

  • SM to rebuild Tacloban hospital
  • PSEi slips after 4-day rally
  • Toyota sells 2.58 million vehicles, outselling GM
  • McDonald’s 1Q profit slips as US sales decline
  • SEC approves SM’s P15B retail bond offer
  • Technology

  • ‘Unlimited’ Internet promos not really limitless; lawmakers call for probe
  • Viber releases new design for iPhone, comes to Blackberry 10 for the first time
  • Engineers create a world of difference
  • Bam Aquino becomes Master Splinter’s son after Wiki hack
  • Mark Caguioa lambasts Ginebra teammates on Twitter
  • Opinion

  • One-dimensional diplomacy: A cost-benefit analysis of Manila’s security deal with Washington
  • No ordinary illness
  • Reforest mountains with fire trees and their kind
  • Day of the Earth
  • When will Chinese firm deliver new coaches?
  • Global Nation

  • 19 Ukrainians, Russians, Filipinas rescued in bar raid
  • Filipinos coming home from Mideast must obtain MERS clearance – DOH
  • US Secret Service in Manila ahead of Obama visit
  • Palace thanks Estrada for successful HK mission
  • Hong Kong accepts PH apology; sanctions also lifted
  • Marketplace