Long term funds surged into PH in April as foreigners snap up PH debt

MANILA, Philippines — The inflow of long term investments into the country continued its momentum in April 2021 as foreign fund managers allocated more money to Philippine-issued debt from both the public and private sectors, according to the Bangko Sentral ng Pilipinas (BSP).

In a statement, the BSP said that foreign direct investment net inflows rose by 114.4 percent year-on-year to $679 million from $317 million in the same period last year.

This brought the foreign direct investment net inflows for the first four months of 2021 to $3.1 billion — a 56.3 percent increase from $2 billion in the comparable period in 2020.

“The higher cumulative FDI net inflows was due to the improvements in all components, led by non-residents’ net investments in debt instruments, which rose by 115.2 percent to $1.9 billion from $897 million,” the BSP said.

Net placements of equity capital also grew at a more modest 8.1 percent to reach $818 million from $756 million. Reinvestment of earnings increased slightly by 2 percent to $307 million from $301 million a year ago.

“Foreign direct investment net inflows in April 2021 rose on the back of positive foreign investor sentiment on the country’s macroeconomic fundamentals and strong growth prospects,” the BSP added.

Net inflows during the month increased due mainly to the 121.2 percent expansion in non-residents’ net investments in debt instruments to $500 million from $226 million in April 2020.

Likewise, non-residents’ net investments in equity capital rose to $97 million in April 2021 from $3 million in the same month in 2020.

This developed as equity capital placements increased by 131 percent to $108 million from $47 million, while withdrawals decreased by 75.1 percent to $11 million from US$44 million.

Equity capital placements during the month originated primarily from Japan, the United States and Singapore. These were invested largely in the manufacturing and real estate industries. Reinvestment of earnings declined by 6.2 percent to $82 million from $88 million in April 2020.

The continued rise in net investments in equity capital in April 2021 resulted in a cumulative increase of 8.1 percent from a 4.3 percent contraction in March 2021, with the level reaching $818 million.

January-April 2021 equity capital placements amounted to $936 million from $934 million, with equity capital withdrawals at $118 million from US$178 million.

Equity capital placements in the first four months of the year were mostly from Singapore, Japan and the US. These were channeled mainly to the electricity, gas, steam, and air-conditioning; financial and insurance; and manufacturing industries.

TSB