Registered foreign portfolio investments for the month amounted to US$1.8 billion, reflecting a 22.6 percent decline from the previous month’s level due to hesitancy to invest during the “ghost month”. However, a 57.4 percent increase was noted compared to the US$1.1 billion figure recorded a year ago.
In contrast, outflows for the month rose to US$1.3 billion (or by 10.6 percent) from US$1.2 billion in previous month due to profit taking, disappointing first half corporate earnings reports and investor reaction to the possible interest rate hike in the United States which may take effect as early as September 2016. Year-on-year, however, gross outflows declined by 19.8 percent.
On the overall, foreign portfolio investment transactions in August 2016 yielded net inflows of US$427 million, reflecting a 60.0 percent decline compared to the July level. However, this was a significant improvement from last year’s net outflows of US$543 million.
Year-to-date transactions likewise resulted in overall net inflows of US$2.0 billion 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 government securities (GS).
About 82.8 percent of investments registered in August were in PSE-listed securities (mainly pertaining to holding firms; property companies; banks; food, beverage and tobacco firms; and telecommunication companies), while the 17.2 percent balance went to Peso GS. Transactions in PSE-listed securities and Peso GS yielded net inflows of US$248 million and US$186 million, respectively, while investments in other Peso debt instruments resulted in net outflows (US$7 million).
The United Kingdom, United States, Singapore, Luxembourg, and Belgium were the top five (5) investor countries for the month, with combined share to total of 78.5 percent. The United States continued to be the main destination of outflows, receiving 84.2 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.