Foreign investors hiked debt, equity stakes in PH in ‘19, BSP says

The amount of Philippine financial assets owned by foreign entities increased at the end of last year, outstripping the increase in the value that locals invested overseas, according to the latest data from the central bank.

In a statement, the Bangko Sentral ng Pilipinas said the country’s international investment position as of end-December 2019 posted a higher net external liability position of $34.8 billion compared to the level of $33.5 billion in the previous quarter.

The 4-percent increase in the net external liability position developed as the rise in total external financial liabilities, or nonresidents’ outstanding investments in the Philippines, at 2.2 percent to $231.9 billion, outpaced that of total external financial assets, or residents’ outstanding investments abroad, at 1.9 percent to $197.1 billion.

“The increase in the country’s net external liability position reflected continued inflows on the back of investor confidence in the Philippine economy,” the central bank said.

The international investment position is a snapshot of Filipinos’ investments in foreign financial assets plus gold bullion held as reserve assets, versus foreigners’ investments locally. The difference between these assets and liabilities represents either a net claim on or a net liability to the rest of the world.

On a year-on-year basis, the country’s net external liability position as of end-2019 was considerably lower by 28.3 percent from $48.6 billion posted in end-2018. During the year, the country’s external financial assets expanded by 11.9 percent, while external financial liabilities grew only by 3.2 percent.

On a quarterly basis, the country’s total external financial liabilities rose by $5.1 billion as of end-December 2019 due to transaction inflows, particularly in the form of foreign direct investments in equity capital and debt instruments, coupled with positive exchange rate and other valuation adjustments.

Likewise, the country’s total external financial assets increased by $3.7 billion from the previous quarter mainly on account of accumulation of reserve assets, combined with the increase in the amount of residents’ direct investments abroad.

By sector, only the registered a net external asset position during the quarter, ending the year at $86.8 billion. Meanwhile, the remaining sectors representing the national government, deposit-taking corporations and other sectors recorded a net external liability position.

The country’s total external outstanding financial liabilities to the rest of the world consisted mostly of investments in equity and investment fund shares under direct investments (23.6 percent) and portfolio investments (22.3 percent). These were followed by foreign loans availed by residents (20.2 percent), and non-residents’ investments in debt instruments (16.7 percent) and debt securities (13.3 percent) issued by residents. INQ