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Foreign portfolio investments yield net inflows for 2016

01.12.2017

Foreign portfolio investment transactions for 2016 yielded net inflows of US$354 million, largely due to: (a) an initial public offering by an industrial company; (b) investments in shares of two (2) holding companies and a universal bank; and (c) renewed interest in Peso government securities (GS). This was in sharp contrast to the US$600 million net outflows noted for 2015, attributed to growing concerns about the then impending interest rate adjustment in the United States and profit taking.

Registered foreign portfolio investments for the year aggregated US$17.6 billion, 11.8 percent lower than the US$19.9 billion level of the previous year. Registered investments were mainly in PSE-listed securities (82.5 percent) and Peso GS (17.3 percent).  Monthly gross inflows ranged from a low of US$820 million in January to a peak of US$2.3 billion in July.

Outflows for the year of US$17.2 billion were 16.1 percent lower compared to the US$20.5 billion in 2015. About 96.8 percent of total outflows represented capital repatriation while the remaining 3.2 percent pertained to remittance of earnings.

Transactions for PSE-listed securities resulted in net outflows (US$150 million), while net inflows were realized for all other types of instruments (Peso GS – US$465 million; Peso TD – US$33 million; and other peso debt instruments – US$6 million).

The United Kingdom, the United States, Singapore, Luxembourg, and Hong Kong were the top five (5) investor countries during the year, with combined share to total of 76.7 percent, while the United States continued to be the main destination of outflows, receiving  83.1 percent of total.

Registration of inward foreign investments with the Bangko Sentral ng Pilipinas (BSP) is optional 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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