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Foreign Portfolio Investments Yield Net Inflows in July 2017


Foreign portfolio investments registered in July 2017 amounted to US$1.4 billion, reflecting a decline of 28.9 percent and 36.8 percent from the US$2.0 billion and US$2.3 billion recorded in June 2017 and July 2016, respectively.

Outflows for the month of US$1.2 billion were 36.8 percent lower than the US$1.9 billion figure in June, but were 2.1 percent higher compared to US$1.2 billion a year ago.

On the overall, transactions for the month yielded net inflows of US$206 million, an improvement from the US$73 million last month. This may be attributed to: (i) positive investor sentiment on news of inflation declining to 2.8 percent in June from 3.1 percent in May; (ii) strong net foreign buying; (iii) investor reaction to President Rodrigo R. Duterte’s second State of the Nation Address; and (iv) the US Federal Reserve’s decision to maintain interest rates. However, the figure is lower compared to US$1.1 billion in July last year.

On a year-to-date basis (from January to 4 August 2017), however, transactions still reflected net outflows of US$204 million, due to certain domestic and international developments, such as the US air strike against Syria, global terrorist attacks, interest rate increase by the US Federal Reserve, political turmoil in the US, and the closure order for several mining companies in the country. In contrast, net inflows of US$1.7 billion were realized for the same period a year ago (January to 5 August 2016).

About 90.5 percent of the registered investments in July 2017 were in PSE-listed securities (pertaining mainly to food, beverage and tobacco companies, holding firms, banks, property companies, and utilities companies). The 9.5 percent balance went to Peso government securities (GS). Transactions in PSE-listed securities yielded net inflows of US$224 million, while investments in Peso GS resulted in net outflows of US$18 million.

The United States, Singapore, the United Kingdom, Luxembourg, and Switzerland, were the top five (5) investor countries for the month, with combined share to total of 82.6 percent. Meanwhile, the US continued to be the main destination of outflows, receiving 86.1 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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