BSP-registered foreign portfolio investments yield net outflows in March

Bangko Sentral ng Pilipinas (BSP)-registered foreign portfolio investments^[1] (FPI) for March 2020 yielded net outflows of US$961 million resulting from the US$1.9 billion outflows and US$954 million inflows for the month.

This is a reversal from the recorded net inflows of US$40 million in February.

The US$954 million registered investments reflected a 30.6 percent decline from the US$1.4 billion figure in February 2020.

About 93.0 percent of investments registered during the month were in PSE-listed securities (pertaining mainly to property companies, holding firms, banks, food, beverage and tobacco companies and transportation services firms) while the remaining 7.0 percent went to investments in Peso government securities.

The United Kingdom, the United States (US), Singapore, Hong Kong and Luxembourg were the top five (5) investor countries for the month, with combined share to total at 83.9 percent.

Outflows for the month (US$1.9 billion) were higher by 43.5 percent compared to the level recorded for February (US$1.3 billion).

This may be attributed to the general risk off sentiment in the market that has prompted investors to liquidate portfolios and keep money in cash amid heightened worries over adverse economic impact of the coronavirus (COVID-19) pandemic and despite the initial fiscal stimulus package of the government.

The US received 68.5 percent of total outflows.

Year-to-date (1 January to 3 April 2020) FPI transactions yielded net outflows of US$1.5 billion resulting from the US$5.2 billion gross outflows and US$3.7 billion gross inflows for the said period.

This is a reversal from the US$293 million net inflows noted for the same period last year brought about by uncertainties due, among others, to the impact of the COVID-19 pandemic to the global economy and financial system, and other key events earlier in the year such as the: (i) continuing geopolitical tensions between the US and Iran; (ii) ongoing trade negotiations between the US and China; and (iv) renegotiation of the contracts of the country’s water concessionaires.

Meanwhile, year-to-date transactions for all investments (PSE-listed securities, Peso GS, and other investments) resulted in net outflows.

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.