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Foreign Portfolio Investments Post Net Outflows in May

06.11.2015

Transactions in foreign portfolio investments during May resulted in overall net outflows of US$569 million compared to US$31 million in April. This development may be attributed to profit taking and outward remittance of sales proceeds of investments in PSE- listed stocks and Peso GS previously kept in interim peso deposits.  In contrast, net inflows of US$545 million were noted a year ago due to investor reaction to reports of strong first quarter corporate earnings and the second credit rating upgrade from BBB- to BBB for the Philippines by Standard & Poor’s.

Registered foreign portfolio investments for May 2015 amounted to US$1.6 billion, reflecting a 17.8 percent decline from US$1.9 billion level in April arising from: a) disappointing first quarter corporate earnings; b) poor manufacturing data from China; and c) weaker-than-expected first quarter GDP growth of 5.2 percent vis-à-vis 6.6 percent in the previous quarter. The level is also lower compared to the US$2.0 billion recorded a year ago when public offerings were made by a food, beverage and tobacco company and a properties firm. 

About 80.6 percent of investments registered in May were in PSE-listed securities (mainly pertaining to holding firms; banks; food, beverage and tobacco companies; property companies; and utilities firms); the rest of the investments were in Peso GS (19.2 percent) and other peso  debt instruments (0.2 percent).

The United Kingdom, the United States, Singapore, Hong Kong, and Belgium were the top five (5) investor countries for the month, with combined share to total of 77.0 percent. The United States continued to be the main destination of outflows, receiving 76.6 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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