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Foreign portfolio investments yield net outflows in May 2017

06.15.2017

Registered foreign portfolio investments in May 2017 reached US$1.5 billion, reflecting a 12.5 percent increase from the US$1.3 billion recorded in the previous month. Year-on-year, however, inflows declined by 16.8 percent from US$1.8 billion a year ago.

Outflows for the month amounted to US$1.5 billion, up by 19.0 percent compared to the US$1.3 billion level in April due to profit taking. The reverse was noted year-on-year as outflows declined by 11.8 percent.

On the overall, transactions resulted in net outflows of US$24 million, a reversal from the net inflows recorded last month and a year ago (US$51 million and US$73 million, respectively). This may be attributed to investor reaction to weak first quarter earnings of some corporations and lower-than-expected GDP data of the country for the first quarter of 2017.

On a year-to-date basis, transactions resulted in overall net outflows of US$544 million, in contrast to the net inflows of US$178 million for the same period last year. While outflows were relatively steady, there was a substantial drop in inflows which may be attributed to continued uncertainties arising from domestic and international developments, such as the United States air strike against Syria, global terrorist attacks, the interest rate increase by the US Federal Reserve in March 2017, and the closure order for several mining companies in the Philippines.

About 79.1 percent of investments registered during the month were in PSE-listed securities (pertaining to mainly holding firms, property companies, banks, food, beverage and tobacco firms, and utilities companies); 18.4 percent went to Peso government securities (GS); and the 2.5 percent balance to other Peso debt instruments (OPDIs). Transactions in PSE-listed securities and OPDIs yielded net inflows of US$103 million and US$35 million, respectively, while investments in Peso GS resulted in net outflows of US$163 million.

The United Kingdom, the United States, Singapore, Malaysia, and Luxembourg were the top five (5) investor countries for the month, with combined share to total of 76.9 percent. Meanwhile, the US continued to be the main destination of outflows, receiving 79.2 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 (FX) transactions.  The issuance of a BSP registration document entitles the investor or his representative to buy FX from authorized agent banks and/or their subsidiary/affiliate FX 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 FX will have to be sourced outside the banking system.

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