Philippines in fourth straight month of weaker long-term investment inflows

MANILA, Philippines – Long term equity capital entering the Philippines from overseas slowed for the fourth straight month in a row in November 2018 — a trend reversal that ended the record high investment levels being reported earlier last year, data from the central bank showed.

According to the Bangko Sentral ng Pilipinas (BSP), foreign direct investments recorded net inflows of $531 million in November 2018. This level was 45.9 percent lower than the $982 million net inflows posted in November 2017.

“The decline was due largely to the drop in net investments in debt instruments (consisting mainly of inter-company borrowings/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines), which amounted to $333 million from $724 million in the same month in 2017,” the central bank said.

Net investments of equity capital registered $137 million, which was 31.9 percent lower than the $202 million net equity capital inflows in November 2017. Equity capital placements during the month were sourced largely from Taiwan,the United States, Thailand, Luxembourg, and the Netherlands.

These investments were channeled mostly to financial and insurance; electricity, gas, steam and air conditioning supply; manufacturing; and real estate activities. Reinvestment of earnings rose by 9.5 percent to $61 million in November 2018.

As a result of these developments, foreign direct investments registered $9.1 billion net inflows in January-November 2018, 3.2 percent lower than the $9.4 billion recorded in the same period in 2017.

The lower net inflows were attributed mainly to the 28.3 percent decline in net investments of equity capital, which reached $2.1 billion in the first eleven months of 2018.

Equity capital placements during the period — mostly from Singapore, Hong Kong, the United States, Japan and China — were invested mainly in manufacturing; financial and insurance; real estate; arts, entertainment and recreation; and electricity, gas, steam and air-conditioning supply activities.

Meanwhile, net investments in debt instruments grew by 9.3 percent to reach $6.2 billion from $5.7 billion in the same period last year. Reinvestment of earnings also increased by 2.8 percent to $738 million.