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Foreign portfolio investments in August 2017 result in net outflows

09.14.2017

Registered foreign portfolio investments in August 2017 amounted to US$936 million, down by 34.7 percent and 46.7 percent from figures recorded the previous month and a year ago, respectively, as trading is thin during the “ghost” month (August) because of hesitancy to invest.

About 84.9 percent of investments registered during the month were in PSE-listed securities (pertaining mainly to banks, holding firms, food, beverage and tobacco companies, property firms, and transportation services companies). The 15.1 percent balance mainly went to Peso government securities (GS). Transactions in PSE-listed securities yielded net inflows, while investments in Peso GS and other Peso debt instruments resulted in net outflows.

The United Kingdom, the United States (US), Luxembourg, Malaysia, and Hong Kong, were the top five (5) investor countries for the month, with combined share to total of 77.7 percent. Meanwhile, the US continued to be the main destination of outflows, receiving 79.9 percent of total remittances.
 
Outflows for the month (US$994 million) were lower (by 19.1 percent and 25.3 percent than the US$1.2 billion and US$1.3 billion recorded in July and one year ago).

On the overall, transactions for the month resulted in net outflows of US$58 million, a reversal from the US$206 million net inflow realized in July 2017. This may be attributed to August being considered the “ghost” month, as well as investor reaction to the following: (i) rising geopolitical tension between the US and North Korea; (ii) mixed second-quarter corporate earnings; (iii) reinvigorated anti-drug campaign of the administration; and (iv) alleged anomalies at the Bureau of Customs.

Year-to-date transactions (2 January to 1 September 2017) resulted in net outflows of US$319 million. The cumulative net outflows resulted from certain domestic and international developments, such as the US air strike against Syria, global terrorist attacks, interest rate hikes by the US Federal Reserve, political turmoil in the US, tension between the US and North Korea, and the closure order for several mining companies in the country. In contrast, net inflows of US$2.0 billion were noted for the comparative period last year (4 January to 2 September 2016).

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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