Long-term investments decline for 4th straight month in June—BSP

The entry of long term capital into the Philippines continued to go slow in June, marking the fourth consecutive month of weaker investment inflow into the country since the start of 2019 that was interrupted only by a slight jump in February.

According to the Bangko Sentral ng Pilipinas, foreign direct investments (FDI) registered net inflow of $430 million in June 2019, representing a 48.5-percent decline versus the $836 million in net inflow posted in the same period last year.

Non-residents’ investments in debt instruments, or lending by foreign companies abroad to their local affiliates to fund existing operations and business expansion, registered lower net inflow of $317 million from $570 million. Likewise, non-resident’s net investments in equity capital decreased to $25 million from $184 million.

Equity capital placements in July came mostly from Singapore, the United States, Japan, the Netherlands and China. These investments were channeled mainly to real estate; manufacturing; financial and insurance; electricity, gas, steam and air conditioning supply; and transportation and storage industries.

Reinvestment of earnings expanded by 8.3 percent to $89 million from $82 million in the same month last year.

For the first six months of 2019, net inflow of FDIs totaled $3.6 billion, or 38.8 percent lower than the $5.8 billion net inflow recorded in the first semester of last year.

The numbers tell the story. According to the BSP, net equity capital fell to $361 million from $1.6 billion. Placements fell by more than 50 percent to $860 million from $1.7 billion. Withdrawals, or investors’ money leaving the Philippines, increased by a whopping 206 percent to $499 million from $163 million.

Equity capital placements during the period were largely from Japan, the US, Singapore, China and South Korea.

Industries that benefited from these capital infusions were financial and insurance; real estate; manufacturing; transportation and storage; and administrative and support services.

In addition, lower net investments in debt instruments were recorded at $2.7 billion from $3.8 billion. Earnings plowed back to the economy as investments increased by 12.1 percent to $507 million from $453 million in the first semester of 2018./tsb