$354-M net portfolio inflows posted in 2016

BSP reports

The central bank registered $354 million worth of net inflows in 2016, an improvement from the previous year’s $600 million net outflows, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

The BSP said the net inflows were mainly because of a market initial public offer last year and notable investments in equities as well as “renewed interest in peso government securities”.

“This was in sharp contrast to the $600 million net outflows (in) 2015, attributed to growing concerns about the then impending interest rate adjustment in the US and profit taking,” said the BSP.

In a statement, the BSP said it registered foreign portfolio investments of $17.6 billion in 2016, which was 11.8 percent lower than the $19.9 billion in 2015. Registered investments were mainly in listed securities at the stock exchange or 82.5 percent of the total, while peso government securities accounted for 17.3 percent.

According to the BSP, the monthly gross inflows were a low of $820 million in January to a high of $2.3 billion in July last year.

“Outflows for the year of $17.2 billion were 16.1 percent lower compared to the $20.5 billion in 2015. About 96.8 percent of total outflows represented capital repatriation while the remaining 3.2 percent pertained to remittance of earnings,” explained the BSP.

It added that the transactions for listed securities amounted to $150 million net while net inflows were also recorded for peso government securities of $465 million; peso time deposits of $33 million; and other peso debt instruments totalling $6 million.

“The United Kingdom, the US, Singapore, Luxembourg, and Hong Kong were the top five investor countries during the year, with combined share to total of 76.7 percent, while the US continued to be the main destination of outflows, receiving 83.1 percent of total,” said the BSP.

HSBC in a commentary yesterday said the Philippines “continues to stand out as one of Asia’s strongest performers” after turning out 7.1 percent GDP growth in the third quarter 2016.

“There are various headwinds on the horizon for the regional economy next year and, while the Philippines is not completely spared, the economy remains relatively insulated,” according to HSBC’s Joseph Incalcaterra. “There are fears that investment from the US, which is the largest contributor of FDI in the Philippines, might fall under new US economic policies. However, China has made investment commitments (hard and soft) of $24 billion recently, which could partly offset the potential decline in FDI from the US.”

“In any case, the Philippines will continue to see significant changes to the balance of payments dynamic,” added Incalcaterra. “We forecast the current account continuing to moderate through 2018, but a pick-up in capital inflows following potential FDI reform could partly offset the weaker current account.”