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FDI inflows still weak as economic worries keep investors gun-shy

By: - Reporter / @daxinq
/ 04:05 AM December 11, 2019

Foreign direct investments recorded net inflows of $566 million in September 2019, 2.9 percent lower than the $582 million posted in the same period last year, the central bank said on Tuesday.
In a statement, the Bangko Sentral ng Pilipinas said this was mainly “due to the decline in non-residents’ net investments in debt instruments.”

“However, the reversal of net equity capital investments from net outflows to net inflows mitigated the decrease in net investments in debt instruments,” the regulator explained.
Net investments in debt instruments consisting mainly of intercompany borrowings or lending between foreign direct investors and their subsidiaries/affiliates in the Philippines decreased by 36 percent to $395 million from $618 million.

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Meanwhile, non-residents’ net equity capital investments posted a 182 percent growth to $96 million, from net equity capital withdrawals of $117 million, as placements increased by 79.5 percent from $69 million to $125 million, while withdrawals declined by 84.8 percent (from $187 million to $28 million.

Equity capital placements during the period were sourced largely from Japan, Taiwan, the United States, Hong Kong and Netherlands.
These investments were channeled mainly to financial and insurance, manufacturing, and real estate industries.

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Reinvestment of earnings declined by 9.4 percent to $74 million from $82 million in the same month last year.On a cumulative basis, foreign direct investments for the first three quarters of 2019 recorded net inflows of $5.1 billion, 36.9 percent lower than the $8.1 billion net inflows registered last year.

“The slowdown in inflows reflected the adverse effects of the prolonged trade disputes, which continued to affect global growth negatively and prompted foreign investors to hold off their investment plans in emerging markets including the Philippines, until global growth outlook improves,” the BSP said.

Consequently, non-residents’ net investments in debt instruments declined by 32.6 percent to $3.7billion from $5.5 billion, and equity capital by 66.7 percent to $632 million from $1.9 billion.Net equity capital investments decreased as placements dipped by 45.7 percent to $1.2 billion from $2.3 billion, while withdrawals increased by 58.7 percent to $607 million from $382 million.
The bulk of equity capital placements during the period emanated from Japan, the United States, Singapore, China and South Korea. The industries that benefited from the these capital infusions were financial and insurance, real estate and manufacturing. INQ

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