Foreign Portfolio Investments Result in Net Outflows in October 2017

Foreign portfolio investments registered in October 2017 reached $1.4 billion, higher by 6.8% than the $1.3 billion recorded the previous month, according to data from the Bangko Sentral ng Pilipinas (BSP). This may be attributed to investor optimism arising from the anticipated approval of the tax reform program of the government. However, the figure is lower compared to the $1.6 billion a year ago.

About 89.8% of investments registered during the month were in PSE-listed securities (pertaining mainly to holding firms, property companies, mining, banks, and food, beverage and tobacco companies); 10.1% went to Peso government securities (GS), while the 0.1% balance to other Peso debt instruments (OPDIs) and Peso time deposits (PTDs). Transactions in the following instruments resulted in net outflows: PSE-listed securities – $513 million; Peso GS – $47 million; and PTDs – $4 million; while transactions in OPDIs yielded net inflows of $1 million.

The United States (US), the United Kingdom, Norway, British Virgin Islands, and Luxembourg were the top five investor countries for the month, with combined share to total of 81%.

Profit-taking resulted in outflows for the month ($1.9 billion) which rose by 64.5% and 23.8% compared to $1.2 billion and $1.6 billion for the previous month and a year ago, respectively. The US continued to be the main destination of outflows, receiving 75.5% of total remittances.

On the overall, transactions for October resulted in net outflows of $563 million, a reversal from the net inflows recorded in September 2017 ($113 million) and October 2016 ($60 million).

Year-to-date transactions (2 January to 3 November 2017) resulted in net outflows of $812 million, in contrast to the net inflows of $1.5 billion for the comparative period last year (4 January to 4 November 2016). This may be attributed to certain domestic and international developments (including the interest rate hikes by the US Federal Reserve, global terrorist attacks, North Korea’s nuclear missile testing and the closure order for several mining companies in the country).

Registration of inward foreign investments with the BSP is optional under the liberalized rules on foreign exchange (FX) transactions.  The issuance of a BSP registration document entitles the investor or his representative to buy FX from banks and their subsidiary/affiliate FX corporations for repatriation of capital and remittance of earnings that accrue thereon.

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