Value of foreign investments grew in ’12, says BSP

The value of foreign investments in the Philippines grew by more than a third at the end of last year as stock prices surged due to the country’s healthy growth prospects.

The stronger local economy also led drove the peso upwards, making assets denominated in the local currency more valuable in dollar terms, data from the Bangko Sentral ng Pilipinas (BSP) showed this week.

“Sound macroeconomic fundamentals … boosted investors’ confidence in the economy, which was reflected in the appreciable increases in portfolio, direct, and other investment liabilities,” the BSP said in a statement.

The country’s net liability position grew by 39.1 percent to $34.1 billion at the end of 2012, up from the revised $24.5 billion in net liabilities the year before, based on data on the Philippines international investment position (IIP).

Investments in the country are booked as liabilities of the country because these are owned by foreigners, who are expected to eventually take profits and pull out their investments out of the country.

The country’s IIP also takes into account investments by Filipinos in other countries. The BSP said total external financial assets, or overseas investments of locals, increased by 12.4 percent to $119.7 billion, while total external liabilities, or investments of foreigners in the country, increased by 17.5 percent to $153.8 billion.

The growth in investments in the Philippines, the BSP said, came mainly from the higher valuations of shares listed on the Philippine stock exchange and other peso-denominated securities.

About 72 percent of the increase in the value of foreign investments was attributed to higher market prices, 13 percent was attributed to the stronger peso, while the remaining 15 percent came from the entry of actual money from abroad.