The central bank is reviewing its foreign investments assumptions this year for the Philippines, taking into account new turbulent economic conditions abroad that may push more money into the country.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo said there has been a reversal in recent weeks of the outflow of foreign capital from the country caused by jitters over the US Federal Reserve’s hints on the end of its ultra-cheap money policies.
With the impasse in the US Congress threatening to send the world’s largest economy back into turmoil, emerging markets like the Philippines that exhibit strong growth stand to benefit.
“There is some reflow back to the emerging markets,” Guinigundo said.
After falling to a net inflow of $2.007 billion at the end of August, foreign investments in stocks, bonds, and other peso securities recovered to a net inflow of $2.639 billion as of Sept. 27, roughly the same amount recorded in the same week the year before.
He said the Philippines remains an attractive investment destination for foreign fund managers, given the country’s consumption-driven economy that bodes well for corporate profitability.
The Philippines earlier this month also won its third “investment grade” rating from a major credit rating agency, which makes locally issued debt instruments less risky in the eyes of foreigners.
Apart from foreign portfolio investments, or “hot money,” the BSP said foreign direct investments (FDI), which are long-term placements in the country, have also been on a rise.
FDIs increased by 227 percent to reach $533 million in July 2013 compared to the $163 million posted in the same month last year.