An interest rate cut and an improved economic outlook has resulted in a sharp surge in foreign investment heading mainly into the local stock market, central bank governor Amando Tetangco said Monday.
The bank said in a statement the net inflow of foreign investment in Philippine stocks, bonds and other financial instruments in October amounted to 274.14 million dollars, up from 35.78 million in September.
"The generally upbeat outlook on the domestic economy sustained the positive investor sentiment," the bank said. Tetangco credited the 25 basis point cut in domestic interest rates on October 4 and the upward adjustment in the International Monetary Fund's 2007 growth forecast for the Philippine economy to 6.3 percent from 5.8 percent.
Investors were also encouraged by some positive signs about the health of the US economy that emerged last month, and reports of strong third-quarter earnings of Philippine companies, he added.
Gross inflows in October totalled 1.2 billion dollars of which 79 percent went to shares listed in the Philippine Stock Exchange while the rest went to peso-denominated government securities. Net inflows in the first 10 months of 2007 shot up 94.7 percent over the same period last year to hit 3.7 billion dollars.
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