Foreign Portfolio Investment Transactions Yield Net Inflows in August
Registered investments for the month of August 2018 amounted to $1.1 billion, reflecting a 16.9 percent improvement from the $959 million figure in July 2018. Likewise, a 19.7 percent year-on-year growth may be noted from the $936 million level recorded during the previous year.
The United Kingdom, the United States, Singapore, Hong Kong, and Luxembourg were the top five investor economies for the month, with combined share to total at 80.5 percent. About 79.9 percent of investments registered during the month were in listed securities in the Philippine Stock Exchange (PSE) (pertaining mainly to property companies, holding firms, banks, food, beverage and tobacco firms, and telecommunication companies). The balance (19.4 percent) went mostly to Peso government securities (GS), while the remaining amount (less than 1 percent) went to both other Peso denominated debt instruments (OPDIs) and Peso time deposits (Peso TD). Net inflows were noted for transactions in PSE-listed securities ($39 million), Peso GS ($180 million), OPDIs ($6 million), and Peso TD (less than $1 million).
Outflows for the month ($895 million) were lower by 1.2 percent and 9.9 percent, respectively, compared to those recorded in July 2018 ($906 million) and August 2017 ($994 million). The US continued to be the main destination of outflows, receiving 81.5 percent of total remittances.
On the overall, transactions for the month yielded net inflows of $226 million which is a significant increase from net inflows of $53 million in July 2018 and in contrast with the net outflows of $58 million recorded for August 2017. This may be attributed to investors’ reaction to: (i) good second quarter corporate earnings results, (ii) the forthcoming infrastructure initiatives of the government, and (iii) the recent resumption of trade talks between the US and China which all lifted market sentiments.
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.