Short term investments trickle into PH stocks, ups flow in August

MANILA, Philippines—Short term overseas portfolio investments in the country’s financial markets yielded a slight surplus in August thanks to funds going into the local bourse, according to the central bank.

Despite this, the overall balance of “hot money” into the Philippines remained negative since the start of the year due to the economic uncertainty caused by the COVID-19 pandemic, the same data from the Bangko Sentral ng Pilipinas (BSP) showed.

According to the BSP, registered foreign portfolio investments for August 2021 yielded net inflows of $12 million resulting from the $807 million gross inflows and $795 million gross outflows for the month—a reversal of the net outflows of $340 million recorded in July.

The $807 million registered investments for August 2021 reflected a 10.6 percent increase from the $730 million recorded in July 2021.

Of this total, 64.7 percent of investments registered were in Philippine Stock Exchange-listed securities — investments mainly in food, beverage and tobacco companies, property companies, holding firms, banks and transportation services — while the remaining 35.3 percent went to investments in peso-denominated government securities.

The United Kingdom, the United States, Singapore, Norway and Luxembourg were the top five investor countries for the month with combined share of 79.3 percent.

The $795 million gross outflow for the month was lower by 25.6 percent than the $1.1 billion recorded in July 2021. The US received 69 percent of total outflows.

According to the BSP, domestic developments during the month were:

• Improvement in corporate earnings for the second quarter of 2021
• Recomposition of PSE’s benchmark index
• Reimplementation of strict quarantine measures in selected areas of the country
• Lowering of the gross domestic product growth target by the Development Budget Coordination Committee
• Narrowing of the national government’s fiscal deficit for the month of July 2021.

This was accompanied by the release of data on overseas Filipinos’ personal remittances for the first half of the year, the inflation for July 2021 and GDP numbers for the second quarter of 2021.

Year-on-year, registered investments rose by 21.1 percent from the $667 million recorded in August 2020. Gross outflows were slightly higher by 0.3 percent than the outflows recorded a year ago. Further, the $12 million net inflows were also a reversal of the $127 million net outflows recorded for the same period in 2020.

Transactions for portfolio investments from January to August yielded net outflows of $434 million, lower than the $3.9 billion net outflows noted for the same period in 2020.

This has been accompanied by international and domestic developments like:

• A new US administration
• Progress of vaccine rollout in the country
• Continuing quarantine restrictions to contain the surge in COVID-19 cases, especially of Delta
• Inflation breaching the 2-4 percent target
• Improving market sentiment amid positive economic growth in the second quarter
• Passage of key fiscal and asset management reforms

TSB