On a month-on-month basis, however, net portfolio inflows plunged to $98.7 million in May from a high of $297 million in April.
The BSP said the five-month net inflow was already 3.7 times more than the total net inflow for the whole of 2004 despite the decline since March when total net inflows peaked at $562 million.
Always fickle and sentiment-driven, foreign portfolio investments are expected to drop further in the next few months as investors worry over the ongoing political controversies amid renewed questions on the legitimacy of the ruling Arroyo administration.
According to BSP Deputy Governor Amando Tetangco, the BSP is still expecting inflows to pick up eventually when the political noise dies down.
The BSP said total inflows amounted to $3.194 billion from January to May while outflows amounted to $1.375 billion, indicating that portfolio investments remained as fickle as ever.
Portfolio investments generally go to equity stocks listed at the Philippine Stock Exchange (PSE) but the bulk of inflows stay only long enough to make a profit.
Despite the huge outflows, however, the inflows for the first four months of the year was still about 18.3 times more than the $99.2-million net inflows recorded over the same period last year.
"Last year, there was much more political uncertainty so most of these portfolio investors stayed in the sidelines," Tetangco said. "This year, the prospects are better so more of them are coming in."
For the whole year, the BSP earlier said total foreign portfolio investments could go up to as high as $4 billion, especially if the Arroyo administration could deliver its entire P80-billion tax reform package.
According to the BSP, portfolio investments were encouraged by the unexpectedly early removal of the Philippines from the blacklist of the Financial Action Task Force (FATF).
If, on top of the FATF development as well as the Supreme Court ruling allowing foreign investors into local mining companies, the government should actually generate P80 billion in incremental revenues, the BSP said net portfolio investments would surge even more.
However, the threats of destabilization plots against the Arroyo administration have created fresh uncertainty that Tetangco said could be detrimental if not resolved immediately.
Tetangco warned that the longer the political uncertainty lingers, the more adverse the impact on the peso which has slowly been regaining lost ground for the last two months until the market was hit anew by a series of scandals involving top officials of the Arroyo administration.