2017 Foreign Portfolio Investment Transactions Show Net Outflows

Registered foreign portfolio investments for 2017 aggregated $16.1 billion, 8.9 percent lower than the $17.6 billion level in the previous year, according to the Bangko Sentral ng Pilipinas (BSP). On a monthly basis, the lowest gross inflows were recorded in August ($936 million) while the peak was noted in June ($2 billion).

On a quarterly basis, the largest inflows were noted in the second quarter at $4.8 billion, representing 30 percent of the total for the year. This may be attributed to positive investor sentiment arising from the World Bank’s view that the Philippines will continue to be a top performer in the region, and the conflict resolution in Marawi City. These were further supported by accelerated net foreign buying as well as the approval by Congress of the first phase of the tax reform package.

Outflows for the year amounting to $16.3 billion were, however, much lower compared to $17.2 billion in 2016. About 96.4 percent of the outflows represented capital repatriation, with the remaining 3.6 percent pertaining to earnings.

Transactions for 2017 resulted in overall net outflows of $205 million, in contrast to net inflows of $404 million noted for 2016. However, while net outflows were noted starting in the first quarter of the year ($568 million) attributable to international and domestic developments (such as the interest rate increases in the United States, and the closure order for several mining companies in the country), the figure has subsequently declined as investors reacted positively to the various developments in the country, including the approval of the first phase of the tax reform program of the Government.

Portfolio investments registered during the year were mainly in PSE-listed securities (81.9 percent) and Peso government securities (GS) (17.5 percent). Net inflows were noted for other Peso debt instruments and unit investment trust funds, net outflows were recorded for PSE-listed securities, Peso GS, and Peso time deposits.

The United Kingdom, the United States, Singapore, Luxembourg, and Malaysia were the top five investor countries during the year, with combined share to total of 74.8 percent. The United States continued to be the main destination of outflows, receiving 80.2 percent of total.

Registration of inward foreign investments with the Bangko Sentral ng Pilipinas is optional under the liberalized rules on foreign exchange transactions. The issuance of a BSP registration document entitles the investor or his representative to buy foreign exchange from authorized agent banks and/or their subsidiary/affiliate foreign exchange corporations for repatriation of capital and remittance of earnings that accrue on the registered investment.  Without such registration, the foreign investor can still repatriate capital and remit earnings on his investment but the foreign exchange will have to be sourced outside the banking system.

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