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

Bangko Sentral ng Pilipinas (BSP)-registered foreign portfolio investments^[1] for January 2021 yielded net inflows of USD98 million resulting from the USD952 million gross inflows and USD854-million gross outflows for the month.

This is a reversal from the net outflows of USD524-million recorded in December 2020.

The USD952-million registered investments for January reflected a 12.2% decline compared to the USD1.1-billion recorded in December 2020 (or by USD132-million).

About 62.1% of investments registered were in PSE-listed securities (pertaining mainly to banks, holding firms, property companies, food, beverage and tobacco companies and transportation services firms) while the remaining 37.9% went to investments in Peso government securities.

The United Kingdom, Singapore, United States (US), Luxembourg and Hong Kong were the top five (5) investor countries for the month, with combined share to total at 83.4%.

Outflows for the month (USD854-million) were lower compared to the level recorded for December 2020 (USD1.6-billion) by 46.9% (or by USD754-million).  The US received 71.7% of total outflows.

Developments for the month included, among others: (i) the storming of the US Capitol resulting in several deaths and injuries; (ii) confirmation of Joe Biden as the 46^th US President; (iii) reports confirming the local transmission of the new Covid-19 variant; (iv) emergency use authorization granted by the Food and Drug Administration for two (2) Covid-19 vaccines along with other vaccine rollout policies; and (v) investor reaction to the country’s investment grade rating from Fitch Ratings, which was retained at “BBB” with a stable  outlook.

Year-on-year, registered investments were 23.0% lower than the USD1.2-billion level recorded in January 2020.  Similarly, gross outflows were lower than the outflows recorded a year ago (USD1.7-billion or by 50.4%).  Furthermore, the USD98-million net inflows are a reversal of the USD486-million net outflows recorded for the same period a year ago.

Registration of inward foreign investments with the 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.