A SURGE in equity and investment funds as well as equity placements boosted the country’s foreign direct investment (FDI) net inflows in February 2024, according to the Bangko Sentral ng Pilipinas (BSP).
The data showed the foreign direct investment (FDI) net inflows grew 29.3 percent year-on-year to reach $1.36 billion from the $1.06 billion net inflows in February 2023.
The data showed a 480.4-percent increase in equity and investment fund shares, and nearly a thousand percent increase in net investments in equity capital.
“This development was due to the 927.3-percent expansion in nonresidents’ net investments in equity capital [other than reinvestment of earnings] to $764 million from $74 million in February 2023,” according to BSP.
BSP said the developments brought the cumulative FDI net inflows in January-February 2024 to $2.3 billion, higher by 48.2 percent than the $1.5 billion net inflows recorded in January-February 2023.
“The growth in FDI reflects sustained investor confidence in the country’s macroeconomic fundamentals and resilience amid persistent inflationary pressures and global economic uncertainties,” BSP said.
The data also showed that under net investments in equity capital, there was a 660.2-percent increase in placements: reaching $857 million in February 2024 from $113 million in the same period in 2023.
Withdrawals, however, also showed a 142.1-percent increase to $93 million in February 2024 from $38 million. However, compared to $110 million posted in January 2024, the February withdrawals was lower.
BSP also said the growth in FDI inflows was tempered by the 41.5-percent contraction in nonresidents’ net investments in debt instruments to $533 million in February 2024 from $912 in February 2023.
Further, the data showed reinvestment of earnings slightly declined by 3.8 percent to $66 million from $69 million.
“[The] bulk of the equity capital placements during the reference month came from the Netherlands, with investments directed mostly to the financial and insurance industry,” BSP said.
It explained that net investments in debt instruments consist mainly of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines.
The remaining portion of net investments in debt instruments are investments made by nonresident subsidiaries/associates in their resident direct investors, i.e., reverse investment.
BSP said FDI includes investment by a nonresident direct investor in a resident enterprise, whose equity capital in the latter is at least 10 percent.
It also covers investments made by a nonresident subsidiary/associate in its resident direct investor. FDI can be in the form of equity capital, reinvestment of earnings, and borrowings.
