Long-term foreign fund inflows surged 46% in Feb
Coursed mainly to debt instruments
Net inflows of foreign direct investments (FDI) surged by 46 percent year-on-year in February, reaching $893 million from $611 million in the same month of 2021, despite a surge in COVID-19 cases during the period.
The Bangko Sentral ng Pilipinas (BSP) said in a statement that in February, long term investors continued to infuse funds to their local subsidiaries.
This brought the combined net inflows for January and February to a net inflow of $1.7 billion, an increase of 8 percent from a $1.6 billion net inflow in the same two months of 2021.
“Specifically, the expansion in the January-February 2022 net inflows was due mainly to the 29 percent growth in nonresidents’ net investments in debt instruments to $1.4 billion from $1 billion in the comparable period last year,” the BSP said.
Meanwhile, reinvestment of earnings—another form of FDI—for the two months eased by one percent to $152 million from $153 million.
Also, nonresidents’ net investments in equity capital— other than reinvestment of earnings—was almost halved, falling by 47 percent to $204 million from $383 million in the same period last year.
The result was a 49-percent drop in equity capital placements, to $234 million from $462 million. This, in turn, more than offset the 62-percent drop in capital withdrawals to $30 million from $79 million.
Placements came mostly from Japan, the United States, and Kuwait, and were invested mainly in the manufacturing, financial and insurance, and real estate industries.
In February alone, FDI net inflows were supported by a 41-percent surge in nonresidents’ net investments in debt instruments of local affiliates, which settled at $722 million from $513 million in the same month of 2021.
Also, nonresidents’ net investments in equity capital other than reinvestment of earnings, ballooned by 320 percent to $97 million from $23 million.
Equity capital placements made in February jumped 26 percent to $116 million from $92 million. At the same time, equity capital withdrawals shrank by 72 percent to $19 million from $69 million.
Equity capital placements came in mostly from Kuwait, Japan, and the United States. These were channeled mainly to the financial and insurance, manufacturing, and real estate industries.
In February, reinvestment of earnings eased to $74 million from $75 million.