Foreign Portfolio Investments Yield Net Inflows for October 2016

Manila—(PHStocks)—Bangko Sentral ng Pilipinas (BSP)—Foreign portfolio transactions for October 2016 reversed to overall net inflows of US$60 million, a turnaround from the US$807 million net outflows recorded in the previous month. The figure also reflected an improvement from last year’s net inflows of US$28 million.

Registered investments for the month reached US$1.6 billion, 28.2 percent higher than the US$1.3 billion in September 2016.  This was mainly due to brighter growth projections by Moody’s Investors Service for the Philippines, in recognition of the country’s sound macroeconomic and fiscal fundamentals, coupled with renewed investor interest in Peso government securities (GS). On a year on year basis, a slight decline (0.9 percent) was noted compared to the US$1.6 billion figure in 2015.

Outflows for the month declined by 24.4 percent from US$2.1 billion the previous month, and by 2.9 percent from US$1.6 billion last year.

Year-to-date transactions yielded overall net inflows of US$1.3 billion in contrast to net outflows of US$360 million for the same period last year.  This was mainly due to: (a) an initial public offering by an industrial company; (b) large net inflows in shares of two (2) holding companies and a universal bank; and (c) renewed interest in Peso GS.

About 76.1 percent of investments registered in October were in PSE-listed securities (mainly pertaining to holding firms; property companies; banks; food, beverage and tobacco firms; and telecommunication companies); 21.8 percent  were investments in Peso GS; and the 2.1 percent balance went to Peso time deposits (TDs). Transactions across all types of investment instruments resulted in net inflows: Peso TDs (US$31 million); PSE-listed securities (US$17 million) and   Peso GS (US$12 million).

The United Kingdom, United States, Singapore, Malaysia, and Luxembourg were the top five (5) investor countries for the month, with combined share to total of 74.1 percent. The United States continued to be the main destination of outflows, receiving 88.4 percent of total remittances.

Registration of inward foreign investments with the Bangko Sentral ng Pilipinas (BSP) is voluntary 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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