$340M Portfolio Investment Outflows Registered For July
BSP-registered foreign portfolio investments (FPIs)1 for July 2021 yielded net outflows of US$340 million resulting from the US$1.1 billion gross outflows and US$730 million gross inflows for the month. This is a reversal from the net inflows of US$335 million recorded in June 2021.
Photo Insert: The Bangko Sentral ng Pilipinas
The US$730 million registered investments for July 2021 reflected a 65.3 percent (or by US$1.4 billion) decline compared to the US$2.1 billion recorded in June 2021.
About 64.4 percent of investments registered were in PSE-listed securities (investments mainly in property companies, holding firms, food, beverage and tobacco companies, banks, and transportation services) while the remaining 35.6 percent went to investments in Peso government securities.
The United Kingdom, United States (US), Singapore, Norway, and Luxembourg were the top five (5) investor countries for the month with a combined share to a total of 77.1 percent.
The US$1.1 billion gross outflows for the month were lower by 39.6 percent (or by US$702 million) than the level recorded for June 2021 (US$1.8 billion). The US received 63.5 percent of total outflows.
Domestic developments during the month included investor reaction to: (a) release of inflation data for June 2021; (b) reports of vaccinations put on hold by some local government units due to supply constraints; (c) rising COVID-19 cases due to the more contagious Delta variant strain; and (d) announcement of the reimposition of enhanced community quarantine in Metro Manila from 06 August 2021.
This was accompanied by the following: (i) affirmation of Fitch Ratings (Fitch) of the county’s credit rating at “BBB,” which is one notch above the minimum investment grade; however, the outlook on the rating was adjusted from “stable” to “negative”; and (ii) personal remittances from overseas Filipinos (OFs) rising by 13.3 percent to US$2.652 billion in May 2021 from US$2.341 billion in May 2020.
Year-on-year, registered investments rose by 1.5 percent from the US$719 million recorded in July 2020. Gross outflows were lower than the outflows recorded a year ago (US$1.2 billion or by 8.8 percent). Furthermore, the US$340 million net outflows were lower compared to the US$453 million net outflows recorded for the same period a year ago.
Transactions for BSP-registered FPIs from 1 January to 31 July 2021 yielded net outflows of US$446 million, lower than the US$3.8 billion net outflows noted for the same period last year (1 January to 31 July 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: (1) new US administration; (2) progress of vaccine rollout in the country; (3) continuing quarantine restrictions to contain the surge in COVID-19 infections, especially with the rise in the Delta variant cases; (4) the country’s inflation breaching the 2.0 to 4.0 percent target which is consistent with the outlook that such will persist during the first half of this year due to supply-side pressures; and (5) improving market sentiment amid positive economic growth in Q2 2021 and passage of key fiscal and asset management reforms.
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.