Foreign investments see lower net inflows in August 2024

By Francis Allan L. Angelo

Foreign investments registered with the Bangko Sentral ng Pilipinas (BSP) through authorized agent banks recorded net inflows of $533.95 million (PHP 30.39 billion) in August 2024.

While this marks positive inflows, the amount was 61.4% lower than the $1.38 billion (PHP 78.65 billion) net inflows seen in July.

The sharp decline was primarily due to a decrease in total gross inflows, which dropped by 43.7% to $1.37 billion (PHP 78.03 billion) in August from $2.43 billion (PHP 138.45 billion) in July.

According to the BSP, this reduction reflected lower investments in stocks and government securities as August saw a downturn in registered investments, largely due to reduced inflows in equity securities and peso-denominated government securities.

PSE-Listed Securities Lead Investment Placements

Of the total investments in August, 51.2% went into Philippine Stock Exchange (PSE)-listed securities, particularly in banks, transportation services, holding firms, property, and food and beverage companies.

These amounted to $701.83 million (PHP 39.95 billion). The remaining 48.8%, or $668.89 million (PHP 38.08 billion), were placed in peso-denominated government securities.

Singapore, the United States, the United Kingdom, Luxembourg, and Malaysia were the top sources of foreign investments, contributing 81.5% of the total inflows.

Despite the downturn from the previous month, gross outflows also fell to $836.78 million (PHP 47.63 billion), a 20.3% drop from July’s $1.05 billion (PHP 59.9 billion).

The United States continued to dominate as the top destination for outflows, receiving 52.1% of total outward remittances.

Year-on-Year Growth in Net Inflows

Compared to the same period last year, net inflows for August 2024 showed significant growth.

Net inflows rose 247.9% from $153.46 million (PHP 8.74 billion) in August 2023, despite a slight decline in gross inflows.

Year-to-year outflows, however, saw a larger drop of 35%, reflecting a more cautious approach by investors in reducing their investments abroad.

On a year-to-date basis (January to August 2024), foreign investments registered with the BSP posted net inflows of $1.998 billion (PHP 113.73 billion). This represents a remarkable 542.9% increase compared to the $310.77 million (PHP 17.7 billion) registered during the same period in 2023.

 

What Are Foreign Investments Registered with the BSP?

Foreign investments registered with the BSP typically include PSE-listed securities, peso-denominated government securities, time deposits, and other peso debt instruments.

Investors register these investments if they plan to repatriate their capital or earnings through the banking system and convert their pesos into foreign currency.

However, registration is optional, meaning unregistered investments can still be repatriated, although through alternative means outside the banking system.

Despite the lower inflows in August, BSP officials emphasized that the country continues to attract significant foreign investments overall.

“Year-to-date inflows are considerably higher than the same period last year, reflecting sustained investor confidence,” the BSP report added..