Long-term investments in PH dip in May on fresh COVID worries

MANILA, Philippines—The amount of long term investments that flowed into the Philippines dipped in May — hurt by the new COVID-19 surge — but the total value remained firmly in positive territory for the first five months of the year, according to the central bank.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said foreign direct investment net inflows in May 2021 stood at $429 million, representing a decline of 25.4 percent from $575 million in net inflows during the same month in 2020.

Despite this, the cumulative foreign direct investment level remained higher by 37.8 percent at $3.5 billion net inflows in the Jan–May 2021 period from $2.5 billion net inflows in the same timeframe last year.

In particular, non-residents’ net investments in debt instruments rose by 76.2 percent to $2.2 billion from $1.2 billion. Reinvestment of earnings grew by 3 percent to reach $407 million from $395 million in the same period in 2020. Net investments in equity capital remained broadly stable at $1.3 billion.

“The foreign direct investments decline in May 2021 reflected renewed investor concerns on the rising cases of the new variants of COVID-19 globally,” the BSP said.

By component, non-residents’ net investments in debt instruments during the month contracted by 23.4 percent to $269 million from $351 million in May 2020.

Likewise, non-residents’ net investments in equity capital declined by 53.4 percent to $60 million in May 2021 from $130 million in the comparable month last year.

This was on account of the increase in equity capital withdrawals by 70.2 percent to $21 million from $13 million coupled with the decrease in equity capital placements by 42.6 percent to $82 million from $142 million.

Bulk of the equity capital placements during the month came from Japan, the United States and Malaysia. These were channelled mostly to the manufacturing; real estate; and financial and insurance industries. Reinvestment of earnings rose by 6.0 percent to $99 million from $94 million in May 2020.

On a year-to-date basis, equity capital placements declined by 5.4 percent to $1 billion from $1.1 billion.

Equity capital placements were mainly from Singapore, Japan and the United States. These were infused largely in the financial and insurance; electricity, gas, steam, and air-conditioning; manufacturing; and real estate industries. Equity capital withdrawals also decreased by 26.7 percent to $139 million from $190 million.

The BSP foreign direct investment statistics are distinct from the investment data of other government sources. BSP’s data cover actual investment inflows, in contrast with data from investment promotion agencies which represent commitments that may not necessarily be realized fully.

TSB