Foreign portfolio investment transactions for March 2016 yielded overall net inflows of US$482 million, a significant improvement from the US$58 million level in February, and a reversal from the US$22 million net outflows a year ago.
Foreign portfolio investments registered during the month rose to US$1.7 billion or by 58.1 percent from last month’s figure due to renewed investor interest in government securities, coupled with positive sentiment arising from: i) the decision of the United States Federal Reserve to reduce the number of interest rate hikes in 2016 from four (4) to two (2); ii) the BSP’s decision to keep policy rates steady at 4.0 percent for overnight borrowings and 6.0 percent for overnight lending; and iii) favorable reports on corporate earnings. Registered investments last year were higher at US$2.1 billion due to major stock rights offerings of certain financial enterprises.
Outflows for the month increased by US$196 million (19.4 percent) compared to February due to profit taking. Year-on-year, however, outflows declined by US$897 million (or by 42.6 percent).
About 72.0 percent of investments registered in March were in PSE-listed securities (mainly pertaining to holding firms; banks; food, beverage and tobacco firms; property companies; and telecommunication companies), while the 28.0 percent balance were in Peso GS. Transactions in PSE-listed securities and Peso GS yielded net inflows of US$77 million and US$405 million, respectively.
The United States, Singapore, the United Kingdom, Switzerland, and Hong Kong were the top five (5) investor countries for the month, with combined share to total of 79.2 percent. The United States continued to be the main destination of outflows, receiving 82.3 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.