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Foreign portfolio investment transactions yield net inflows in October


Transactions on BSP-registered foreign portfolio investmentsa for October 2019 yielded net inflows of US$105 million as a result of the US$1.25 billion inflows and US$1.15 billion outflows for the month. This net inflow is a reversal from the net outflows noted in September 2019 (US$232 million).

The US$1.25 billion registered investments reflected a 3.8 percent decrease from the US$1.30 billion figure in September. About 81.9 percent of investments registered during the month were in PSE-listed securities (pertaining mainly to holding firms, banks, property companies, retail companies, and food, beverage and tobacco companies) while the remaining 18.1 percent balance went to investments in Peso GS. The United Kingdom, the United States (US), Singapore, Luxembourg, and Malaysia were the top five (5) investor countries for the month, with combined share to total at 73.9 percent.

Outflows for the month (US$1.15 billion) were lower compared to the level recorded for September 2019 (US$1.53 billion or by 25.1 percent). The US received 74.8 percent of total outflows.

Domestic and international developments for the month included: (i) progress on the US and China trade discussions; (ii) initial public offerings by firms in the industrial and services sectors; (iii) the BSP’s decision to reduce the reserve requirement ratio for universal/commercial and thrift banks by 100 basis points; and (iv) further slowdown of headline inflation to 0.8 percent in October from 0.9 percent in September.

Year-on-year, registered investments were 31.5 percent higher than the US$953 million level recorded in October 2018. Similarly, gross outflows were higher than the outflows noted a year ago (US$1.02 billion or by 12.5 percent). In contrast, net outflows of US$68 million were 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.

aRefer to inward foreign investments in PSE-listed securities (PSE); Peso-denominated government securities (GS); Peso time deposits with banks with minimum tenor of 90 days; other Peso debt instruments; unit investment trust funds; and other portfolio investments such as Exchange Traded Funds and Philippine Depositary Receipts

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