BSP-registered FPIs yield net inflows in May 2021

Bangko Sentral ng Pilipinas (BSP)-registered foreign portfolio investments (FPIs)^[i] for May 2021 yielded net inflows of US$417 million resulting from the US$1.5 billion gross inflows and US$1.0 billion gross outflows for the month.

This is a reversal from the net outflows of US$374 million recorded in April 2021.

The US$1.5 billion registered investments for May reflected a 124.0 percent (or by US$807 million) increase compared to the US$651 million recorded in April 2021.

About 67.9 percent of investments registered were in PSE-listed securities (investments mainly to utility companies, property firms, banks, holding firms and food, beverage and tobacco companies) while the remaining 32.1 percent went to investments in Peso GS.

The United Kingdom, Singapore, United States (US), Luxembourg, and Norway were the top five (5) investor countries for the month, with combined share to total at 88.0 percent.

Gross outflows for the month (US$1.04 billion) were higher by 1.6 percent (or by US$17 million) than the level recorded for April 2021 (US$1.03 billion).  The US received 69.5 percent of total outflows.

Domestic developments during the month included:

(i) the country’s inflation of 4.5 percent in April 2021 which is still consistent with the outlook that inflation will breach the 2.0 to 4.0 percent target in the first half of this year due to supply side pressures;

(ii) data on the country’s GDP which posted a decline of 4.2 percent year-on-year in the first quarter of 2021.  GDP is also expected to grow in the second quarter of the year with the support of key legislations, the CREATE and the FIST Acts;

(iii) the BSP’s decision to maintain policy rates;

(iv) the government’s decision to place Metro Manila and select provinces under general community quarantine status with heightened restrictions;

(v) the latest rebalancing of MSCI indices; and

(vi) the S&P Global Ratings maintained BBB+ rating on the Philippines and assigned a stable outlook.

Year-on-year, registered investments rose by 199.9 percent from the US$486 million recorded in May 2020.  Gross outflows were lower than the outflows recorded a year ago (US$1.5 billion or by 30.2 percent). Furthermore, the US$417 million net inflows was a major turnaround compared to the US$1.0 billion net outflows recorded for the same period a year ago.

Transactions for BSP-registered FPIs from 1 January to 31 May 2021 yielded net outflows of US$441 million. This is lower compared to the US$3.1 billion net outflows noted for the same period last year (1 January to 31 May 2020) amid the ongoing impact of the COVID-19 pandemic to the global economy and financial system. This has been accompanied by international and domestic developments such as the new US administration, vaccine rollout and the reimposition of additional quarantine measures to contain the surge of coronavirus infections. The year-to-date transactions for investments in PSE-listed securities and other investment instruments resulted in net outflows, while those for Peso GS yielded net inflows.

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