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Foreign portfolio investment transactions resulted in net outflows for October

11.16.2018

Registered investments for the month of October 2018 amounted to US$953 million, reflecting a 28.2 percent increase from the US$743 million figure in September. In contrast, this represented a 31.2 percent decline from the US$1.4 billion level recorded during the same month a year ago.

About 68.8 percent of investments registered during the month were in PSE-listed securities (pertaining mainly to holding firms, food, beverage and tobacco firms, banks, property companies, and telecommunication companies). The balance went mostly to Peso government securities (GS) (31.2 percent) and Peso time deposits (TDs) (less than US$1 million). Transactions in Peso GS and Peso TDs yielded net inflows of US$233 million and less than US$1 million, respectively; while net outflows were noted for transactions in PSE-listed securities (US$301 million) and other Peso debt instruments (less than US$1 million).

The United Kingdom, United States (US), Singapore, Norway, and Luxembourg were the top five (5) investor countries for the month, with combined share to total at 82.4 percent.

Outflows for the month (US$1.0 billion) were lower compared to those recorded for September 2018 (US$1.2 billion or by 13.8 percent) and October 2017 (US$1.9 billion or by 47.6 percent). The US continued to be the main destination of outflows, receiving 77.7 percent of total remittances.

Overall transactions for the month resulted in net outflows of US$68 million, an improvement from the US$440 million and US$563 million net outflows recorded in September 2018 and October 2017, respectively. The deficit may be attributed to investors’ reaction to the country’s September inflation data coupled with the continuing trade tensions between the US and China.

Year-to-date transactions (1 Jan to 2 November 2018) yielded net inflows of US$94 million compared to the US$812 million net outflows for the same period last year (2 January to 3 November 2017),  which is attributed to a large investment in a holding company registered this year.

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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