Foreign Portfolio Investments Post Net Inflows for 1H 2015

Manila—(PHStocks)—Bangko Sentral ng Pilipinas (BSP)—Transactions for the first six months of the year yielded net inflows of US$738 million, in contrast to net outflows of US$1.3 billion in 2014 when funds shifted back to the US as tapering of the quantitative easing program started in early 2014.

For the month of June 2015, registered foreign portfolio investments rose by 6.4 percent to US$1.7 billion from US$1.6 billion in May. The figure is also slightly higher by 1.4 percent compared to last year’s performance as the US Federal Reserve signaled slower than anticipated interest rate hikes which, based on market expectations, may possibly occur late this year.

However, transactions resulted in overall net outflows of US$522 million as gross outflows increased to US$2.21 million from US$2.16 million in May. This development may be attributed to the following: a) weaker-than-expected first quarter GDP growth of 5.2 percent for the Philippines vis-à-vis 6.6 percent last quarter and disappointing 1Q corporate earnings; b) profit taking; c) growing concerns on the looming interest hike in the United States and; d) the Greek debt crisis. In contrast, modest net inflows of US$44 million were recorded a year ago.

About 79.2 percent of investments registered in June were in PSE-listed securities (mainly pertaining to holding firms; food, beverage and tobacco companies; banks; property firms; and telecommunication companies); the rest of the investments were in Peso GS (20.6 percent) and other peso debt instruments (OPDI – 0.2 percent).

The United States, United Kingdom, Singapore, Luxembourg and Hong Kong were the top five (5) investor countries for the month, with combined share to total of 80.5 percent. The United States continued to be the main destination of outflows, receiving 77.1 percent of total.

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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