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Foreign portfolio investments yield net inflows in January

02.13.2015

Transactions for the month resulted in overall net inflows of US$592 million, an improvement from last month’s US$397 million, due to higher investments in PSE-listed shares arising from: (i) a top-up offering of a holding corporation’s shares; (ii) sale of a universal bank’s and holding firm’s shares; and (iii) upgraded growth outlook for the country by the International Monetary Fund. It will be noted that net outflows of US$1.8 billion were recorded a year ago due to the effects of the United States quantitative easing (QE) program tapering.
 
Registered foreign portfolio investments in January 2015 amounted to US$2.2 billion, higher by 16.1 percent than last month’s level and by 71.9 percent compared to last year when the United States (US) started tapering of its QE program.

 Total outflows (US$1.6 billion) for the month was slightly higher (by 7.3 percent) than those recorded in December 2014. Year-on-year, however, outflows were significantly lower (by 48.6 percent) than the US$3.1 billion posted a year ago when investors started diverting funds back to the United States as the US economy began to show signs of recovery.

About 82.0 percent of investments registered in January were in PSE-listed securities (mainly property companies; banks; holding firms; food, beverage and tobacco companies; and utilities firms); 17.4 percent went to Peso GS; and the rest (0.7 percent) of the funds to Peso time deposits. Transactions in PSE-listed securities yielded net inflows of US$561 million, more than four (4) times the US$139 million level in December 2014. Peso GS also posted net inflows of US$36 million, albeit much lower than the US$305 million recorded last month. Year-on-year, transactions for both instruments rebounded from net outflows in 2014 (US$209 million for PSE-listed securities and US$1.5 billion for Peso GS).

The United Kingdom, the United States, Singapore, Switzerland, and Luxembourg were the top five (5) investor countries for the month, with combined share to total at 85.5 percent. The United States continued to be the main destination of outflows, receiving 84.3 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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