Portfolio Investment in Finland's Balance of Payments in 2006

The Bank of Finland has published a statistical bulletin on portfolio investment in Finland's balance of payments in 2006

According to the Bank of Finland’s balance of payment survey, there was a unprecedented net portfolio investment outflow of EUR 13.2 bn in 2006: inward portfolio investment totaled EUR 15.1 bn on net while outward portfolio investment amounted to as much as EUR 28.3 on net, which is twice as much as in the previous year. At the end of 2006, the stock of portfolio investment abroad amounted to EUR 163.3 bn at market value and corresponding investment in Finland to EUR 219.6 bn. Finnish investors’ returns on outward portfolio investment totaled EUR 4.6 bn and foreign investors’ return on inward portfolio investment EUR 7.1 bn.

Outward portfolio investment

Unprecedented outward investment

Finnish institutional investors continued to increase their foreign portfolios in 2006. The largest increase in absolute terms, EUR 14.6 bn on net, was recorded for bond investment. However, new investments in mutual funds registered abroad accounted for the largest relative increase in outward investment, EUR 11.7 bn, whereas investments in foreign shares amounted to just EUR 0.2 bn.

EUR 4.6 bn worth of dividends and interest to Finnish investors

Dividend and interest income on outward portfolio investment amounted to EUR 4.6 bn in 2006. Most of this income was generated on bond investment. In addition to investment income as such, Finnish investors generated an imputed gain of approximately EUR 4.4 bn as a result of market price and exchange rate changes. In relative terms, imputed exchange rate gain accounted for about 14% of the value of share assets and about 8% of the value of mutual fund assets.

Inward portfolio investment

Continued steady net investment in Finnish shares and mutual funds

The net inflow of capital to the Finnish stock market and Finnish mutual fund shares continued at the same pace as in 2005. The portfolio of foreign investors grew by about 15% due to the net inflow and changes in market prices. The OMX Helsinki Index rose by about 17%. According to the Finnish Central Securities Depository, foreign investors own approximately half of the Finnish companies registered in the Finnish book-entry system. Debt securities issued by Finnish monetary financial institutions were sold to foreign investors in the amount of slightly more than EUR 7 bn on net; about the same as in 2005. The public sector's securities-based liabilities increased by just over EUR 4 bn on net, whereas the corresponding liabilities of the corporate sector did not grow.

EUR 7.1 bn worth of dividends and interest to foreign investors

In 2006 foreign investors' returns on inward equity and mutual fund investment amounted to EUR 3.1 bn. Interest drawn on Finnish bonds totaled EUR 3.2 bn.