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Foreign portfolio investment transactions yield net outflows in September

10.11.2018

Registered investments for the month of September 2018 amounted to US$743 million, reflecting a 33.7 percent decrease from the US$1.1 billion figure in August 2018. Likewise, a 42.7 percent year-on-year decline was noted from the US$1.3 billion level recorded during the same month last year.

About 85.7 percent of investments registered during the month were listed securities in the Philippine Stock Exchange (pertaining mainly to holding firms, banks, property companies, food, beverage and tobacco firms, and telecommunication companies). The balance went mostly to Peso government securities (GS) (14.3 percent). Net outflows were noted for all investment instruments; [i.e. PSE-listed securities (US$351 million), Peso GS (US$89 million), other Peso denominated debt instruments (less than US$1 million).]

The United Kingdom, United States (US), Singapore, Switzerland, and Malaysia were the top five (5) investor countries for the month, with combined share to total at 81.8 percent.

Outflows for the month (US$1.2 billion) were higher by 32.2 percent vis-à-vis August 2018 level (US$895 million).  A minimal decline (less than US$1 million) was noted when said amount was compared to the level recorded in September 2017 (US$1.2 billion). The US continued to be the main destination of outflows, receiving 73.7 percent of total remittances.

On the overall, transactions for the month yielded net outflows of US$440 million, in contrast to the net inflows of US$226 million in August 2018, as well as net inflows of US$113 million recorded a year ago.  This may be attributed to investors’ continuing concerns on trade tensions between the United States and China, the weakening of the Philippine peso and the continued uptick in inflation which may have been aggravated by the effects of Typhoon Ompong (Mangkhut).

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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