Defying PH economic woes, long term investment inflows surged 52% in first 7 months
Long term investment inflows into the Philippines continued to defy the outflow of short term capital from the financial markets and the adverse sentiment brought about by high inflation and slowing economic growth, data from the central bank revealed.
According to the Bangko Sentral ng Pilipinas (BSP), net inflows of foreign direct investments for the first seven months of 2018 increased by 52.1 percent to $6.7 billion from $4.4 billion last year.
“This reflected the continued positive investor sentiment on the Philippine economy on the back of strong macroeconomic fundamentals and growth prospects,” the central bank said in a statement.
BSP statistics on foreign direct investments cover actual investment inflows, which could be in the form of equity capital, reinvestment of earnings, and borrowing between affiliates. This kind of capital stays in the local economy longer than portfolio investments which are investment in various local financial markets and can be pulled out at a moment’s notice.
The surge in foreign investments from the January to July period was mainly on account of the expansion in net equity capital investments by more than five times to $1.8 billion from $338 million last year.
Gross equity capital placements grew by almost thrice to $2 billion, while withdrawals declined to $180 million.
BSP data showed that equity capital placements during the period came mainly from Singapore, Hong Kong, Japan, the United States and China. Investments were infused mostly in manufacturing; financial and insurance; real estate; arts, entertainment and recreation; and electricity, gas, steam and air-conditioning supply activities.
Investment in debt instruments expanded by 21.8 percent to $4.3 billion from $3.6 billion last year. Meanwhile, reinvestment of earnings slightly rose to $489 million during the period.
In July of this year alone, foreign direct investments rose significantly to $914 million from the $344 million posted in July 2017.
More than 60 percent of foreign direct investment net inflows during the month were in the form of non-residents’ investments in debt instruments issued by local affiliates (inter-company borrowings), which expanded to $584 million from $136 million in the same period last year.
Net equity capital investments grew by 90.2 percent to reach $261 million from $137 million in 2017. This was on account of the 60.6 percent increase in equity capital placements to $278 million coupled with the decline in withdrawals by 52.3 percent to $17 million.
Equity capital placements were sourced primarily from Singapore, Taiwan, the United States, Korea and Japan. Investments were channeled largely to manufacturing; financial and insurance; real estate; wholesale and retail trade; and administrative and support service activities. Reinvestment of earnings amounted to $69 million during the month. /kga
