Tuesday, 5 April 2011

Foreign funds return to PH

Elaine Ramos Alanguilan, Bloomberg
Manila Standard
http://www.manilastandardtoday.com/insideBusiness.htm?f=2011/april/5/business1.isx&d=2011/april/5

Foreign investors are swarming the country’s financial markets, boosting the stock exchange index to a three-month high and pushing down the yields in Monday’s auction of Treasury bills.

The peso rose to 43.31 against the US dollar from 43.36 Friday while other Asian currencies also climbed on speculation overseas investors are adding to holdings of the region’s assets to take advantage of the economic growth outlook.

Tenders in Monday’s Treasury bill auction hit P31.l76 billion, prompting the government to increase its offering to P9.6 billion after yields across all tenors fell.

“Risk appetite is improving,” said Shigehisa Shiroki, chief trader on the Asian and emerging-markets team at Mizuho Corporate Bank Ltd. in Tokyo. “When stock market performances are solid, the money tends to flow into emerging markets.”

Developing-nation equity funds attracted inflows of $2.6 billion in the week to March 30, the most since the period ended Jan. 5, according to EPFR Global data. Emerging-market bond funds had inflows of $2.3 billion in the first quarter, down from $11.5 billion a year earlier.

The benchmark 91-day Treasury bill in the Philippines fetched 0.9 percent, 22.5 basis points lower than the previous average 1.125 percent.

National Treasurer Roberto Tan told reporters following the auction that lingering worries of an inflationary buildup due to rising oil and food prices had also prompted the market to go for short-dated debt, pushing rates lower across the board.

“There’s strong demand for shorter-term placements. There are still some expectations on inflation. These create uncertainties [in the market]. Therefore, they would like to park in short-term investments,” said Tan.

Inflation in the Philippines accelerated to 4.3 percent in February from just 3.6 percent in January.

The Bangko Sentral expects inflation in March to range between 4 and 5 percent. Market consensus places the March inflation around 4.5 to 4.6 percent.

The 182-day T-bill rate averaged at 1.205 percent, down 54.8 basis points from 1.753 percent, while the one-year debt paper settled at 2.191 percent, 67.4 basis points off the previous rate of 2.865 percent.

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