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Foreign fund managers pulled out $660m in April

Foreign fund managers pulled out more than $600 million from the Philippine equity and bond markets in April amid the uncertainty caused by the coronavirus pandemic.

Data from the Bangko Sentral ng Pilipinas showed that registered foreign portfolio investments yielded net outflows of $660 million in April, following net withdrawals of $961 million in March.

Gross outflows reached $1.3 billion in April while gross inflows amounted to only $627 million during the month, according to the BSP.

“The $627-million registered investments for the month reflected a 34.3-percent decline from the $954 million figure in March 2020 and is also the lowest recorded monthly gross inflows since July 2010,” it said.

About 91.2 percent of investments went to PSE-listed securities mainly to holding firms, property companies, banks, food, beverage and tobacco firms and telecommunication companies while the remaining 8.8 percent went to investments in peso government securities.

The United Kingdom, the United States, Singapore, Hong Kong and Switzerland were the top five investor countries for the month, with combined a share of 85.5 percent.

Outflows in April were lower compared to the $1.9 billion recorded in March.

The BSP said that in the first four months, hot money transactions yielded net outflows of $2.1 billion resulting from the $6.3-billion gross outflows and $4.2-billion gross inflows.

This was a reversal of the $37-million net inflows observed in the same period last year, brought about by uncertainties such as to the impact of the COVID-19 pandemic to the global economy and financial system, and other key events earlier in the year such as the geopolitical tensions between the US and Iran trade negotiations between the US and China and renegotiation of the contracts of the country’s water concessionaires.

Transactions for all investments (PSE-listed securities, peso government securities, and other investments) resulted in net outflows in the four-month period.

Registration of inward foreign investments with the BSP is optional under the liberalized rules on foreign exchange transactions.  

The issuance of a BSP registration document entitles the investor or his representative to buy foreign exchange from authorized agent banks and/or their subsidiary/affiliate foreign exchange corporations for repatriation of capital and remittance of earnings that accrue on the registered investment.

Without such registration, the foreign investor can still repatriate capital and remit earnings on his investment but the foreign exchange will have to be sourced outside the banking system.

Topics: Foreign fund managers , Philippine equity , bond markets , Bangko Sentral ng Pilipinas , BSP , coronavirus disease 2019 , COVID-19
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