Reopening economy, Marcos admin plans seen reversing porftolio outflows

An increasingly reopened domestic economy as well as forthcoming details of the Marcos administration’s economic plans and policy direction could help turn the flow of short-term foreign investments more favorable to the Philippines over the next 12 months, as net outflows widened to $342 million in June.

The Bangko Sentral ng Pilipinas (BSP) said on Friday net outflows in June were heavier than the $270 million recorded in May, reversing net inflows of $334 million in June 2021.

Still, the latest monthly result brought the aggregate amount of BSP-registered foreign investments in the first six months of 2022 to net inflows of $728 million, a turnaround from net outflows of $106 million in the first semester of 2021.

In June, gross outflows of $1.4 billion outweighed gross inflows of $966 million.

Outbound capital alone was 12 percent higher than the $1.2 billion recorded in May, but 22 percent lower than the $1.4 billion of gross outflows in June last year.

More than two-thirds or 69 percent of foreign investments withdrawn from the Philippines in June went to the United States.

Inbound capital alone was 8 percent higher than the $966 million recorded in May, but just about half of the $2.1 billion of gross inflows in June last year.

About four-fifths of gross inflows in June were invested in Philippine Stock Exchange-listed securities issued by companies engaged in property; holding firms; banks; food, beverage and tobacco; and information technology.

Almost a quarter or 23 percent went lent to the government through investments in peso-denominated state securities.

In June, 83 percent of gross inflows came from the United Kingdom, the United States, Singapore, Hong Kong and Switzerland.

Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., said net outflows in June were the widest in 14 months since April 2021 when there were $374 million more outflows than inflows.

Ricafort said results in June were largely brought about by increased volatility and some sell-off not only in the local financial markets but also in the global markets, particularly in the United States where the central bank again raised interest rates in the face of 40-year-high inflation.

President Marcos said in his State of the Nation Address that there would be no more lockdowns, which in the past had been costly for the government, and the economist said this could help support faster economic growth and could lead to some improvement in the foreign portfolio investments data.

“Another catalyst for net foreign portfolio investments would be additional leads on the new administration for the first 100 days or six months or the next year, especially on what the economic team can deliver on major concerns such as inflation, employment, debt management, among others,” Ricafort said.

—RONNEL W. DOMINGO