Philippines records net portfolio investment outflow in Aug on subprime concerns

Sep 13, 2007 - The Philippines recorded a net outflow of 246.4 million US dollars in foreign portfolio investments in August, reflecting investor concerns about a fallout from the US housing and credit problems, the central bank said Thursday.

It was the first monthly net outflow recorded this year and a turnaround from a net inflow of 1.1 billion dollars in July.

"Concerns over the extent and impact on the global credit market of the US subprime mortgage problem led foreign investors to stay on the sidelines," the central bank said in a statement.

"Strong domestic economic data as well as strong corporate earnings results for the first semester, however, tempered the size of the net outflow," it said.

On a gross basis, registered foreign portfolio investments in August totaled 1.39 billion dollars. Of this, 85 percent were invested in the stock market and 15 percent in peso-denominated government securities, the central bank said.

Capital repatriated outside the country amounted to 1.64 billion dollars.

For the first eight months of the year, however, a net inflow of 3.36 billion dollars was recorded, 3.3 times bigger than the previous year's level, central bank data showed.

"The nervousness in the market sparked by the US mortgage crisis led to some outflow during August but overall, the country's economic fundamentals appeared to have broadly kept investors' interest in the Philippines for the first eight months of 2007," the central bank said.

"Moreover, the central bank's announcement that local banks have no exposure to subprime assets also helped ease investors' concerns."