Foreign direct investments into PH surge for second straight month

Short term funds are flowing out due to better yields overseas, but don’t tell that to long term foreign investors who continued to plough their money into the country on the back of what the central bank says is “confidence” in the local economy.

In a statement, the Bangko Sentral ng Pilipinas said that foreign direct investments posted $573 million in net inflows in February 2018, representing an increase of 46.4 percent compared to the level recorded a year ago — the second consecutive month this year that showed strong investment performance.

This was due mainly to the 56.3 percent growth in investments in debt instruments, or intercompany borrowings between foreign direct investors and their subsidiaries/affiliates in the Philippines, amounting to $412 million.

“The sustained investment inflows reflect investor confidence in the country’s sound macroeconomic fundamentals and growth prospects,” BSP Governor Nestor Espenilla Jr. said.

On a cumulative basis, foreign direct investment net inflows for the first two months of 2018 rose year-on-year by 52.6 percent to $1.5 billion.

The strong performance in the first two months of the year sustained the positive momentum in the growth of foreign equity capital in the country after the central bank reported that businessmen from overseas brought in a record amount of investments into the country in the first full year of the Duterte administration—a record high $10 billion in 2017, up by 21.4 percent from the year-ago level.

According to the central bank, net equity capital also increased by 55.4 percent to $96 million, as gross placements of $114 million more than compensated for the withdrawals of $18 million.

Equity capital placements came mostly from Hong Kong, the United States, China, the Netherlands, and Japan. These placements were invested mainly in art, entertainment and recreation; real estate; manufacturing; construction; and electricity, gas, steam and air-conditioning supply activities. Meanwhile, reinvestment of earnings amounted to $65 million during the period.

In particular, net investments in debt instruments reached $793 million, representing a 10 percent growth from the level recorded in the same period last year.

Net equity capital increased by more than fourfold to $569 million during the period.

The bulk of the equity capital placements were sourced primarily from Singapore, China, Hong Kong, Taiwan, and Japan. These were channeled mainly to manufacturing; financial and insurance; real estate; art, entertainment and recreation; and electricity, gas, steam and air-conditioning supply activities. Reinvestment of earnings reached $130 million. /je