Macro and Politics

* Foreign portfolio flows reversed course in the September 11–18 week, with investors offloading USD109.8mn of equities and USD116.9mn of bonds, excluding repo transactions. The renewed outflow from equities followed net purchases of USD277.7mn in the previous week, while the two-week run of foreign buying in the bond market also came to an end. Moreover, foreigners’ share in the total bond stock declined from 7.2% to 6.9% over the same period. On a trailing 12-month basis, cumulative foreign inflows stood at USD2.2bn in equities and USD4.9bn in bonds excluding repos. Year-to-date, net foreign inflows amount to USD1.6bn in equities and USD2.5bn in bonds excluding repos. Over the same period, residents’ FX deposits (excluding gold and adjusted for the EUR/USD parity effect) increased by USD2.7bn, while their total FX deposits (including gold, adjusted for the price effect) rose by USD3bn in the September 11–18 week. In terms of official reserves: The CBT’s gross FX reserves fell by USD4.3bn to USD174.4bn, while net FX reserves dropped by a sharper USD6.4bn to USD55.7bn. Meanwhile, the swap stock increased by USD417mn to USD12.7bn, resulting in a USD6.8bn decline in net reserves excluding swaps to USD43bn.