Foreign portfolio investment transactions result in net inflows in July

BANGKO Sentral ng Pilipinas (BSP)-registered investments for the month of July 2019 amounted to US$1.7 billion, reflecting a 19.0 percent increase from the US$1.4 billion figure recorded in June.

About 76.5 percent of investments registered during the month were in PSE-listed securities (pertaining mainly to banks, holding firms, property companies, retail firms, and food, beverage and tobacco companies); while the 23.5 percent balance went to investments in Peso GS.

The United Kingdom, Hong Kong, the United States, Norway, and Malaysia and were the top five investor countries for the month, with combined share to total at 75.6 percent.

Outflows for the month (US$1.7 billion) were higher compared to levels recorded for June 2019 (US$1.4 billion or by 15.1 percent). The US received 77.8 percent of total outflows.

Overall transactions for the month yielded net inflows of US$15 million, a reversal compared to the net outflows noted in June 2019 (US$35 million) amid:

-better-than-expected inflation data for the month of June coupled with easing domestic inflation for the second quarter of 2019; and

-stronger peso forecast.

Year-on-year, a 75.2 percent increase may also be noted from the US$959 million level recorded during the same month last year. Similarly, gross outflows were higher compared to July 2018 (US$906 million or by 83.8 percent).

In contrast, the net inflows for the month were lower compared to the US$53 million net inflow noted for July 2018.

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. (BSP)