Foreign Portfolio Investment Transactions Result in Net Outflows in June
BSP-registered investments for the month of June amounted to $1.4 billion, reflecting a 14.1 percent increase from the $1.2 billion figure recorded last month. About 73.6 percent of investments registered during the month were in PSE-listed securities (pertaining mainly to property companies, holding firms, banks, food, beverage and tobacco companies, and telecommunication firms); while the 26.4 percent balance went to Peso GS. The United Kingdom, Malaysia, Singapore, the US, and Hong Kong were the top five (5) investor countries for the month, with combined share to total at 82.2 percent.
Outflows for the month ($1.4 billion) were lower compared the level recorded for May 2019 ($2.0 billion or by 27.2 percent). The US received 69.0 percent of total outflows.
On the overall, transactions for the month yielded net outflows of $36 million. By instrument, transactions in Peso government securities (GS) yielded net inflows of $104 million, while net outflows may be noted for transactions in PSE-listed securities ($139 million); and other Peso debt instruments (OPDIs) and other portfolio instruments (each at less than $1 million). Nevertheless, the net outflows for June is an improvement from the net outflows noted in May 2019 ($750 million) amid: (i) domestic inflation data for May 2019 which is within the government’s target of 2 to 4 percent; (ii) resumed trade talks between US and China during the recently held G20 meeting in Japan (28-29 June 2019); and (iii) the anticipated possible interest rate cuts of the US Federal Reserve.
Year-on-year, a 55.0 percent increase in gross inflows was noted from the $911 million level recorded during the same month last year. Similarly, gross outflows were slightly higher than that recorded for June 2018 ($1.43 billion or by 1.4 percent). On the other hand, the net outflows for the month decreased as compared to the net outflow of $516 million noted for June 2018.
Registration of inward foreign investments with the Bangko Sentral ng Pilipinas (BSP) 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.