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Foreign portfolio investments yield net inflows for the third quarter of 2016

10.13.2016

Transactions for the third quarter of 2016 posted overall net inflows of US$687 million, a significant improvement from the net inflows posted for the first quarter (US$410 million) and second quarter (US$170 million) of this year. This was mainly due to an initial public offering by an industrial company as well as renewed interest in Peso government securities (GS).
 
Registered foreign portfolio investments in September 2016 amounted to US$1.3 billion, reflecting a 27.5 percent decline from the US$1.8 billion in August as the following weighed down on investor sentiment: i) lingering uncertainty on the timing of the next interest hike in the United States (US); ii) the bombing in Davao City early September which prompted the government to declare a “state of lawless violence” in the country; and iii) the European Central Bank’s decision to discontinue its bond-buying program. Likewise, a 6.9 percent decrease was noted compared to the US$1.4 billion figure recorded a year ago. 
  
In contrast, outflows for September rose by 56.5 percent from US$1.3 billion the previous month due to profit taking. Year-on-year, outflows grew by 23.0 percent from US$1.7 billion.
 
Transactions for the month resulted in overall net outflows of US$807 million, a reversal from the US$427 million net inflows recorded in August and more than twice last year’s net outflows of US$324 million.

About 88.7 percent of investments registered in September were in PSE-listed securities (mainly pertaining to holding firms; property companies; banks; telecommunication companies; and food, beverage and tobacco firms), while the 11.3 percent balance went to Peso GS. All transactions resulted in net outflows: PSE-listed securities (US$654 million); Peso GS (US$153 million) and other Peso debt instruments (less than US$1 million).

The United Kingdom, United States, Singapore, Malaysia, and Luxembourg were the top five (5) investor countries for the month, with combined share to total of 72.3 percent. The United States continued to be the main destination of outflows, receiving 76.7 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.

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