Foreign portfolio investment transactions yield net inflows in July

Registered foreign portfolio investments for the month of July 2018 amounted to US$959 million, reflecting a 5.3 percent improvement from the US$911 million figure in June 2018. Year-on-year, however, a 33.1 percent decline may be noted from the US$1.4 billion level recorded during the previous year.

The United States (US), United Kingdom, Hong Kong, Singapore, and Luxembourg were the top five (5) investor countries for the month, with combined share to total at 84.8 percent. The bulk of investments registered during the month were in Philippine Stock Exchange (PSE)-listed securities (pertaining mainly to banks, property companies, holding firms, food, beverage and tobacco firms, and small and medium enterprises), while the balance went to Peso government securities (GS). Net inflows were noted for transactions in PSE-listed securities (US$51 million) and other Peso debt instruments (US$11 million), while those for Peso GS resulted in net outflows (US$9 million).

Outflows for the month (US$906 million) were lower by 36.5 percent and 26.2 percent, respectively, compared to those recorded in June 2018 (US$1.4 billion) and July 2017 (US$1.2 billion). The US continued to be the main destination of outflows, receiving 78.7 percent of total remittances.

On the overall, transactions for July 2018 yielded net inflows of US$53 million, a significant reversal from net outflows of US$516 million in June 2018. This may be attributed to investors’ anticipation of good second quarter corporate earnings results. The figure, however, is lower compared to the US$206 million net inflows recorded in July last 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.

Source: Bangko Sentral ng Pilipinas (BSP)

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