Foreign Portfolio Investment Transactions Yield Net Inflows in January
Registered investments for the month of January 2019 amounted to $2.1 billion, increasing by 30.5% compared to $1.6 billion inflows for December 2018. Similarly, inflows reflected a 27% growth relative to levels recorded a year ago ($1.6 billion). About 71.6% of investments registered during the month were in PSE-listed securities (pertaining mainly to holding firms, property companies, banks, food, beverage and tobacco companies, and retail companies), while the 28.4% balance went to Peso government securities (GS) and Peso time deposits (TDs). The United Kingdom, the United States (US), Singapore, Norway, and Hong Kong were the top five investor countries for the month, with combined share to total at 74.7%.
Outflows for the month ($1.299 billion) were lower compared to figures recorded for December 2018 ($1.302 billion or by 0.2%) and January 2018 ($1.5 billion or by 11.1%). The US continued to be the main destination of outflows, receiving 78.4% of total remittances.
On the overall, transactions for the month yielded net inflows of $763 million, an improvement from the $278 million and $162 million net inflows recorded last month and for January 2018, respectively. This may be attributed to investor optimism arising from the easing trade tension between the US and China and the decline in inflation alongside the increase in net foreign buying in PSE-listed shares in January 2019. Net inflows were noted for the following investment instruments: PSE-listed securities ($506 million); Peso GS ($256 million); and Peso TDs (less than $1 million), while transactions in other Peso debt instruments resulted in net outflows of less than $1 million.
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.