Capital and financial accounts yielded net inflows of $2 billion in the third quarter of 2012, which is lower by 21 percent compared to the $2.50 billion recorded in the same period last year, the Bangko Sentral ng Pilipinas (BSP) said.

Capital flows into the country continued notwithstanding fragile global financial conditions arising from the ongoing crisis in the euro area.

“Direct investments posted net inflows of $90 million in third quarter of 2012, a turnaround from the $78-million net outflows in the comparable quarter a year ago. This came about because of the reversal of non-residents’ investments in the country to net inflows of $176 million during the quarter from net outflows of $47 million last year,” the central bank noted.

Rosabel Guerrero, director of the BSP-Department of Economic Statistics, said that investor confidence was buoyed by the credit rating upgrade by Standard and Poor’s on July 4 to one notch below investment grade, as well as the policy rate reduction by the central bank that investors considered as helping to mitigate risks associated with weaker external demand.

”Net inflows of foreign equity capital reached $130 million during the year, reversing the $110-million net outflows posted in the same quarter a year ago,” she said.

Notwithstanding, favorable developments in the domestic front, portfolio investment trends continued to indicate cautiousness in the market amid global uncertainties.

Guerrero said that net inflows of portfolio investments declined to $349 million in the third quarter of 2012 compared to the $722 million in the same quarter last year.

“The following were the sources of inflows during the period; net placements by non-residents in peso-denominated government securities issued by the national government [$740 million]; and non-residents’ net placements in equity securities issued by domestic banks [$291 million] and non-bank corporations [$582 million],” she noted.

However, net inflows of other investments reached $1.5 billion in the third quarter of 2012, lower by 17.4 percent than the level posted in the same quarter last year.