Foreign portfolio investments posted its widest outflow in almost two years in February, data released by the Bangko Sentral ng Pilipinas (BSP) showed.
The data showed “hot money” net outflows reached $531 million as of February 2023. This was the highest since the $541 million worth net outflows in March 2021.
BSP data showed net outflows were driven by $1.2 billion gross outflows and $680 million billion gross inflows for the month.
“Majority of investments [or 79.6 percent] registered were in PSE-listed securities [investments mainly in banks, holding firms, property, food, beverage and tobacco and electricity, energy, power & water], while the remaining went to investments in Peso government securities [20.4 percent] and in other instruments [less than 1 percent],” BSP said.
These investments refer to the following inward foreign investments registered with Authorized Agent Banks (AABs).
These are PSE-listed securities; Peso- denominated government securities; and Peso time deposits with banks with a minimum tenor of 90 days.
The list also includes other Peso debt instruments; unit investment trust funds; and other instruments such as Exchange Traded Funds and Philippine Depositary Receipts.
The $1.2 billion gross outflows for the month were higher by 70.2 percent or by $499 million compared to gross outflows recorded for January 2023 at $712 million. The BSP said the US received 67.3 percent of total outward remittances.
Year-on-year, registered investments in February decreased by 28 percent or by $265 million from the $945 million recorded in February 2022.
The BSP said gross outflows were larger by 80.7 percent or by $541 million than the outflows recorded a year ago at $670 million.
The $531 million net outflow in February 2023 is a reversal compared to the $274 million net outflow recorded for the same period a year ago.
Year-to-date transactions between January 1 and February 28, 2023 for foreign investments registered with the BSP through AABs yielded net outflows of $239 million.
This was a turnaround from the $289 million net inflows noted for the same period last year or between January 1 and February 28, 2022.
The BSP said the registration of inward foreign investments delegated to AABs by the BSP is optional under the rules on foreign exchange (FX) transactions.
It is required only if the investor or its representative will purchase FX from AABs 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 FX will have to be sourced outside the banking system.
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