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Foreign Portfolio Investment Transactions Result in Net Outflows in September

10.17.2019

Transactions on BSP-registered foreign portfolio investments  for September 2019 yielded net outflows of US$232 million as a result of the US$1.5 billion outflows which more than offset the US$1.3 billion inflows for the month.  This net outflow, however, is an improvement from the net outflows noted in August 2019 (US$392 million).

The US$1.3 billion registered investments reflected a 7.2 percent increase from the US$1.2 billion figure in August.  About 80.2 percent of investments registered during the month were in PSE-listed securities (pertaining mainly to property companies, holding firms, banks, food, beverage and tobacco companies, and transportation firms) while the remaining 19.8 percent went to investments in Peso GS. The United Kingdom, the United States (US), Singapore, Malaysia, and Luxembourg were the top five (5) investor countries for the month, with combined share to total at 72.3 percent.

On the other hand, outflows for the month (US$1.5 billion) were slightly lower compared to the level recorded for August 2019 (US$1.6 billion or by 4.5 percent).  The US received 75.0 percent of total outflows.

Domestic and international developments for the month included: (i) ongoing trade tensions between the US and China; (ii) attacks on Saudi Aramco’s oil facilities in Saudi Arabia which triggered the largest jump in oil prices in decades; (iii) the US Federal Reserve’s decision to cut interest rates; (iv) the BSP’s decision to cut interest rates and the reserve requirements ratio of banks; and (v) the impeachment inquiry against US President Donald Trump.

Year-on-year, registered investments were 75.1 percent higher than the US$743 million level recorded in September 2018.  Similarly, gross outflows were higher than the outflows noted a year ago (US$1.2 billion or by 29.5 percent).  In contrast, net outflows for the month was lower from the net outflows (US$440 million) noted for the same period a year ago.

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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