BSP-registered foreign portfolio investments yield net outflows in February 2021

Bangko Sentral ng Pilipinas (BSP)-registered foreign portfolio investments[1] for February 2021 yielded net outflows of US$40 million resulting from the US$1.38 billion gross outflows and US$1.34 billion gross inflows for the month.

This is a reversal from the net inflows of US$98 million recorded in January 2021.

The US$1.34 billion registered investments for February reflected a 40.6 percent increase compared to the US$952 million recorded in January 2021 (or by US$386 million).

About 39.8 percent of investments registered were in PSE-listed securities (pertaining mainly to banks, property companies, holding firms, food, beverage and tobacco companies and telecommunication services firms) while the remaining 60.2 percent went to investments in Peso government securities.

The United Kingdom, Singapore, United States (US), Malaysia and Hong Kong were the top five (5) investor countries for the month, with combined share to total at 83.1 percent.

Gross outflows for the month (US$1.38 billion) were larger compared to the level recorded for January 2021 (US$854 million) by 61.5 percent (or by US$525 million).  The US received 64.2 percent of total outflows.

Developments for the month included, among others: (i) investor reaction to local manufacturing data for January 2021; (ii) ratification of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill; (iii) the signing of the Financial Institutions Strategic Transfer (FIST) Act; (iv) anticipation of the arrival of COVID-19 vaccines in the Philippines; and (v) the BSP’s decision to maintain policy rates.

Year-on-year, registered investments were 2.7 percent lower than the US$1.37 billion recorded in February 2020.  Gross outflows were higher than the outflows recorded a year ago (US$1.33 billion or by 3.3 percent).  Furthermore, the US$40 million net outflows is a reversal of the US$40 million net inflows recorded for the same period a year ago.

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.

[1]  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