Macro and Politics

* Foreign investors returned to the equity market with net purchases of USD277.7mn in the September 4–11 week, while adding a further USD151.2mn to their bond holdings, excluding repo transactions. Moreover, foreigners’ share in the total bond stock remained unchanged at 7.2% over the same period. On a trailing 12-month basis, cumulative foreign inflows amounted to USD2.8bn in equities and USD5.2bn in bonds excluding repos. Year-to-date, net foreign inflows stand at USD1.7bn in equities and USD2.6bn in bonds excluding repos. Over the same period, residents’ FX deposits (excluding gold and adjusted for the EUR/USD parity effect) increased by USD1.1bn, driven by a rise in corporate FX deposits, while their total FX deposits (including gold, adjusted for the price effect) increased by USD1.8bn in the September 4–11 week. The CBT’s FX reserves declined in the September 4–11 week. Gross FX reserves fell by USD5.5bn to USD178.7bn, while net FX reserves decreased by USD3.4bn to USD62.1bn. The swap stock edged up by USD4mn to USD12.3bn over the same period, while net reserves excluding swaps declined by USD3.4bn to USD49.9bn.