Foreign Portfolio Investments Yield Net Inflows in June 2017

Registered foreign portfolio investments in June reached US$2.0 billion, higher by 35.8 percent and 11.4 percent than the US$1.5 billion figure in May and the US$1.8 billion a year ago. This may be attributed to positive investor sentiment relative to the anticipated resolution of the conflict in Marawi City, accelerated net foreign buying, and approval by Congress of the first tax reform package.

Outflows for the month of US$1.9 billion, were up by 28.3 percent from the US$1.5 billion figure in May due to profit taking and investor reaction to the United States (US) Federal Reserve's decision to increase interest rates. The same trend was noted on a year-on-year basis, with outflows rising by 42.5 percent from US$1.4 billion a year ago.

On the overall, transactions for June 2017 yielded net inflows of US$80 million, a reversal from the net outflows of US$24 million recorded in May 2017. However, the figure is lower compared to US$451 million in June last year.

On a year-to-date basis, however, transactions resulted in net outflows of US$461 million, in contrast to the net inflows of US$594 million for the same period last year due to certain domestic and international developments, such as the US air strike against Syria, global terrorist attacks, interest rate increases by the US Federal Reserve, political turmoil in the US, and the closure order for several mining companies in the country.

About 82.0 percent of investments registered in June were in PSE-listed securities (pertaining to mainly holding firms, property companies, telecommunications firms, banks, and utilities companies). About 17.2 percent went to Peso government securities (GS); and the 0.8 percent balance to other Peso debt instruments (OPDIs). Transactions in PSE-listed securities and OPDIs yielded net inflows of US$311 million and US$16 million, respectively while investments in Peso GS resulted in net outflows of US$247 million.

The United States, the United Kingdom, Singapore, Malaysia, and Luxembourg were the top five (5) investor countries for the month, with combined share to total of 80.1 percent. Meanwhile, the US continued to be the main destination of outflows, receiving 64.7 percent of total remittances.

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.

Source: Bangko Sentral ng Pilipinas (BSP)

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