Outflow marks shift to investment abroad

Local punters have turned to investing their portfolios abroad, with a net US$488 million (Bt16.32 billion) leaving the country in April and another $304 million in May in search of greener pastures.

The first quarter still saw a net inflow of $2.6 billion in portfolio investment, which is a component of capital flows in the non-bank sector.

Amara Sriphayak, a senior director of the Bank of Thailand, yesterday said the reversal was a result of the central bank's relaxation for Thai investment abroad. The measure will help promote two-way baht movement.

Foreign investors also pulled their money out of the capital market, with net outflow of $92 million, which brought combined net portfolio investment outflow to $396 million in May.

However, the country registered a net overall capital inflow of $1.14 billion in May, down from $1.34 billion in April. The first-quarter net inflow was $13 billion.

The non-bank sector also includes foreign direct investment and loans.

In May, foreign investors continued to bring in money for their direct investment, amounting to $487 million net, of which $454 million was in the form of equity investment and $33 million in direct loans.

Foreign direct investment registered net inflow of $1.83 billion in the first quarter and $431 million in April.

Amid baht volatility, local companies borrowed $66 million from foreign creditors in May, compared with $311 million in April. In the first quarter, they paid foreign debt back, with a net outflow of $1.4 billion.

The banking sector, which is also part of the country's overall capital flows, registered a net outflow of $62 million in May after marking net inflows in the first four months.

Amara said banks had bought foreign currencies to hedge their positions after importers bought the dollar in the forward market.

"The banks' buying the dollar led to capital outflows in their accounts," she said.

The net inflow in April for banks was $659 million after huge inflows of $7 billion in the first quarter.