The entry of long term investments into the Philippines continued to slow down in July, marking the fifth consecutive month of decline since a slight uptick in February 2019—a phenomenon the central bank attributed to investors made skittish by global economic uncertainties.
Data from the Bangko Sentral ng Pilipinas showed that foreign direct investment net inflows only reached $543 million in July 2019, representing a 41.4-percent drop from net inflows of $926 million during the same period last year.
For the first seven months of 2019, long term equity net inflows aggregated $4.1 billion, which was 39.1-percent lower than the $6.8 billion posted a year ago.
According to the BSP, these numbers ‘reflect the impact of the weak pace of global economic activity that took its toll on investors’ business confidence and investment decisions globally.”
For the month of July alone, nonresidents’ net investments in debt instruments (composed mainly of intercompany borrowings between affiliates) reached $357 million while non-residents’ net investments in equity capital amounted to $99 million during the period.
On the latter, the level was lower compared to that posted a year ago due to the decrease in equity capital placements by 39.6 percent, to $168 million (from $278 million) and expansion of equity capital withdrawals by 302.4 percent, to $69 million (from $17 million).
Equity capital infusions during the month came mostly from Japan, Germany, Singapore, the United States and South Korea.
These placements were directed largely to financial and insurance firms; real estate activities; manufacturing; and human health and social work industries.
Reinvestment of earnings increased by 15.8 percent to $87 million during the month from $75 million a year ago.
The lower figures for the first seven months of the year, on the other hand, stemmed from the decline in nonresidents’ net investments in equity capital by 75.1 percent to $459 million (from $1.8 billion) and in debt instruments by 30.3 percent to $3.1 billion (from $4.4 billion).
During this period, placements of equity capital contracted by 49.2 percent to $1 billion (from $2 billion), and equity capital withdrawals increased by 215.8 percent to $569 million (from $180 million).