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Foreign portfolio investments result in net outflows in March 2017

04.20.2017

Foreign portfolio investments (or FPIs) transactions for March 2017 resulted in overall net outflows of US$460 million, slightly higher than the US$409 million net outflows recorded in February 2017.

Registered foreign portfolio investments during the month amounted to US$1.4 billion, reflecting a 40.0 percent increase from the US$981 million recorded in February 2017 due to bargain hunting after the much anticipated interest rate increase by the United States Federal Reserve and the BSP’s decision to maintain the interest rate on the overnight reverse repurchase facility at 3.0 percent. Year-on-year, however, inflows declined by 18.7 percent.

Outflows for the month rose to US$1.8 billion (or by 31.9 percent) from US$1.4 billion in February due to profit taking and news about higher inflation (3.4 percent in March 2017, from 3.3 percent in February 2017, and 1.1 percent a year ago). Year-on-year, outflows also rose by 51.9 percent from US$1.2 billion in 2016.

For the first quarter of 2017, registered FPIs amounted to US$3.5 billion, while outflows were recorded at less than US$4.1 billion, resulting in overall net outflows of US$568 million. This is attributable mainly due to profit taking and continued uncertainties arising from international and domestic developments, such as the anticipated interest rate increase in the United States (US), and the closure order for several mining companies in the country.

About 83.8 percent of investments registered in March were in PSE-listed securities (pertaining to mainly holding firms, banks, property companies, food, beverage and tobacco firms, and telecommunication companies). The balance were investments in Peso government securities (GS - 14.9 percent) and unit investment trust funds (UITFs - 1.3 percent). Net outflows were recorded for PSE-listed securities (US$320 million) and Peso GS (US$158 million), while net inflows (US$18 million) were noted for investments in UITFs.

The United Kingdom, US, Singapore, Belgium, and Switzerland were the top five (5) investor countries for the month, with combined share to total of 73.9 percent. The US continued to be the main destination of outflows, receiving 87.6 percent of total remittances.

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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