BSP-registered foreign portfolio investments yield net inflows in August 2021

Bangko Sentral ng Pilipinas (BSP)-registered foreign portfolio investments (FPIs)[i] for August 2021 yielded net inflows of US$12 million resulting from the US$807 million gross inflows and US$795 million gross outflows for the month.

This is a reversal from the net outflows of US$340 million recorded in July 2021.

The US$807 million registered investments for August 2021 reflected a 10.6 percent (or by US$77 million) increase compared to the US$730 million recorded in July 2021.

About 64.7 percent of investments registered were in PSE-listed securities (investments mainly in food, beverage and tobacco companies, property companies, holding firms, banks and transportation services) while the remaining 35.3 percent went to investments in Peso government securities.

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 79.3 percent.

The US$795 million gross outflows for the month were lower by 25.6 percent (or by US$274 million) than the US$1.1 billion recorded in July 2021.  The US received 69.0 percent of total outflows.

Domestic developments during the month were: (i) improvement in corporate earnings for the second quarter of 2021; (ii) recomposition of PSE’s benchmark index; (iii) reimplementation of strict quarantine measures in selected areas of the country; (iv) the lowering of gross domestic product (GDP) growth target by the Development Budget Coordination Committee; and (v) narrowing of the National Government’s (NG) fiscal deficit for the month of July 2021.

This was accompanied by the release of data on: Overseas Filipinos (OFs) personal remittances for the first half of the year; inflation for July 2021; and GDP for the second quarter of 2021.

Year-on-year, registered investments rose by 21.1 percent from the US$667 million recorded in August 2020.

Gross outflows were slightly higher than the outflows recorded a year ago (US$793 million or by 0.3 percent). Furthermore, the US$12 million net inflows were also a reversal of the US$127 million net outflows recorded for the same period a year ago.

Transactions for BSP-registered FPIs from 1 January to 31 August 2021 yielded net outflows of US$434 million, lower than the US$3.9 billion net outflows noted for the same period in 2020. This has been accompanied by international and domestic developments such as the: (1) new US administration; (2) progress of vaccine rollout in the country; (3) continuing quarantine restrictions to contain the surge in COVID-19 infections, especially with the rise in the Delta variant cases; (4) the country’s inflation breaching the 2.0 to 4.0 percent target which is consistent with the outlook that such will persist due to supply-side pressures; and (5) improving market sentiment amid positive economic growth in Q2 2021 and passage of key fiscal and asset management reforms.

Registration of inward foreign investments with the BSP is optional under the rules on foreign exchange transactions. It is required only if the investor or its representative will purchase 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 its investment but the foreign exchange will have to be sourced outside the banking system.

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[i] Refer 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