Foreign firms poured in a record $1.5 billion in investments in September, data from the Bangko Sentral ng Pilipinas (BSP) showed.
Amid the rosy economic backdrop provided by the government, however, divestments in November showed a hot money outflow of $68.8 million, a separate BSP data showed.
BSP said the amount of foreign direct investments (FDI) that came in at the end of the third quarter was more than double the $680 million posted a year ago, mainly due to “notable increase in non-residents’ investments in equity capital and debt instruments issued by their local subsidiaries/affiliates.”
“In particular, equity capital investments during the month increased more than three-fold to $600 million, as gross placements of $1.2 billion more than offset withdrawals of $553 million,” the BSP added.
Bulk of the equity capital placements last September, which came from American, British, Dutch, German and Japanese investors, were parked in the construction, financial and insurance, manufacturing, real estate, and retail and wholesale trade sectors.
Investments in debt instruments, meanwhile, jumped by 89.7 percent to $869 million from $458 million a year ago due to “significant intercompany borrowings, particularly, in the transportation and storage, and construction industries.” Reinvestment of earnings, however, dropped by 17.1 percent year-on-year to $51 million in September.
As a whole, “the surge in FDI inflows in September reflects investor confidence in the country’s strong macroeconomic fundamentals (sustained gross domestic product or GDP growth of 5.8 percent in the second quarter, manageable inflation, consistent build-up of foreign exchange reserves, and stable exchange rate),” the BSP said.
Net inflows from January to September this year was down 5.5 percent to $4.5 billion compared to the same period last year mainly on double-digit declines in foreigners’ net investments in debt instruments as well as reinvestment of earnings.
The BSP also disclosed that more foreign portfolio investments or “hot money” flowed out in November, reversing the net inflows of $27.8 million a month ago and $369.9 million a year ago.
Portfolio investments are considered short-term bets—hence the nickname hot money—because these placements may be pulled out quickly.
Last November, registered foreign portfolio investments dipped by over a third to $1.1 billion from $1.6 billion in October “as investors reacted to weak third-quarter corporate earnings reports; renewed concerns on the prospect of interest rate hike in the US by December 2015; and the thin volume of transactions brought about by trading holidays,” the BSP said. The November inflows were also lower by almost two-fifths than the $1.8 billion registered last year.