The country's transactions on foreign investments posted net outflows of $236 million in March, the Bangko Sentral ng Pilipinas (BSP) reported Wednesday.

This was a reversal of the $689 million net inflows in February.

From January to March, however, transactions on foreign investments coursed through banks accumulated into net inflows amounting to $377 million.

Foreign investments include non-residents' funds placed in stocks listed with the Philippine Stock Exchange (PSE), government-issued bonds and other peso-denominated time deposits and debt instruments.

Gross outflows

In March, gross outflows of $1.6 billion surpassed gross inflows of $1.4 billion.

The gross outflows grew by 91 percent or an additional of $785 million to the $859 million recorded in February.

Most investors instead placed their money in US-based securities with a 53.9 percent share and total investment value of $887 million, the BSP said.

Meanwhile, the gross inflows decreased by 9.1 percent or $140 million.

The BSP said the bulk or 56.7 percent of the investments represented PSE-listed securities worth $798 million.

Top investments recipients

Top recipients of the investments were banks, holding firms, property developers, transportation service providers, and food, beverage and tobacco manufacturers.

Investments came mostly from the United Kingdom, Singapore, US, Switzerland and Luxembourg.

Middle Eastern war's effect

First Metro Investment Corporation (FMIC) said any worsening of the war between Israel and Iran, along with speculations on higher interest rates from the US Federal Reserve, could sway investors from the equities market to bonds.

"Thus, from end-March US 10-year yields had reached by 34 basis points to 4.63 percent by 15 April, and have pushed local 10-year yields even more by 50 basis points to 6.7 percent," FMIC said in its market call report for April.

"Movements abroad, especially the explosive Middle East conflict, will keep yield premiums elevated," it noted.

FMIC said the PSE index slightly declined by 0.6 percent to 6,903 in March compared to February.

Meanwhile, FMIC said demand for Treasury bills or short-term debt increased as the secondary market grew by 14.4 percent month-on-month amid economic uncertainties.

"We had expected a weak second quarter but the nerve-wracking situation in the Middle East will keep investors in local equities at bay. Barring an escalation of the region's conflict, we keep our forecast of 7,000 to 7,500 in the second half of the year," FMIC said.

To prevent inflation spikes, FMIC added the BSP will likely maintain a high interest rate until August as economists expect local inflation to breach 4 percent due to possibly higher global oil and rice prices.