THE sharp drop in asset prices last year, a consequence of the global economic turmoil, led to holding losses of $146 million (about P7 billion) for Filipinos who had invested in foreign securities issued offshore, a report of the Bangko Sentral ng Pilipinas showed.
According to the BSP, the paper losses were due to the heightened risk aversion, which led to weaker demand for perceivably risky instruments and, therefore, a decline in the market values of securities.
?As of end-2008, residents? foreign portfolio investments recorded holding losses amounting to $146 million as the market value of long-term securities decreased in the midst of the global financial turbulence,? the BSP said in a report entitled ?2008 Coordinated Portfolio Investments Survey for the Philippines,? which was released Friday.
In the same report, the BSP said the onset of the global economic turmoil last year not only led to sharp drop in foreign investment inflows to the Philippines, but also to a sharp contraction of investments by Filipinos to securities issued abroad.
The outstanding value of portfolio investments offshore of Filipino investors as of end-2008 contracted by nearly 30 percent to $4.6 billion from the $6.5 billion in end-2007, the report showed.
Of the $1.9-billion drop in the outstanding value of portfolio investments, the BSP explained, $146 million was due to decline in asset prices. The balance was attributed to the actual pullout of investments.
Monetary officials said the decline came with the global deterioration of appetite for investments last year, especially in the latter months when news about the collapse of Lehman Brothers and other corporate giants in the United States broke.
The decline was seen in almost all forms of portfolio investments, the report showed.
Investments of Filipinos in equities from abroad fell by 77 percent to only $42 million from $186 million the year before.
Purchases of long-term debt securities contracted by 25 percent to $3.61 billion from the previously recorded $4.79 billion. Investments in short-term debt instruments amounted to $959 million, down 38 percent from $1.5 billion.
The bulk of investments by Filipinos in foreign securities were in instruments issued in the United States. These accounted for 40 percent of total investments, or $1.8 billion. This, however, marked a 23-percent drop from $2.37 billion as of end-2007.