Net inflows of foreign direct investments (FDI) dropped to their smallest level in three months in September, with the Bangko Sentral ng Pilipinas (BSP) saying a stricter pandemic-related lockdown could have affected investor sentiment.
Central bank data showed on Thursday that inflows in the ninth month declined by 12.3 percent to $523 million from $596 million a year earlier. The amount was the lowest since June’s $503 million.
“The two-week modified enhanced community quarantine in Metro Manila and surrounding areas in the first half of August may have dampened investor sentiment on prospects of the economy’s reopening,” the BSP said in a statement.
It traced the decrease to the 14.3-percent drop in net investments in debt instruments, which slipped to $362 million from $423 million in the same month last year.
Reinvestment of earnings also plunged to $62 million in September from $77 million a year ago.
“The decline in FDI net inflows were partly mitigated by the 2.5-percent growth in nonresidents’ net investments in equity capital, which reached $99 million from $96 million in September last year,” the Bangko Sentral said.
It also said the 8.6-percent decrease in placements of equity capital to $114 million from $125 million was slower than the decline in withdrawals, which contracted by 46.5 percent to $15 million from $28 million.
The September infusions came largely from Japan, the United States and Singapore. These were channeled mainly into the manufacturing, real estate, and financial and insurance industries.
The latest amount dragged the nine-month tally, which narrowed by 8.6 percent to $4.83 billion from $5.28 billion in the same period in 2019.
“The decline in FDI inflows reflected the worldwide cautious investment climate, following the continued effects of the prolonged Covid-19 (coronavirus disease 2019) health crisis on the global economic outlook,” the BSP explained.
By component, nonresidents’ net investments in debt instruments contracted by 22 percent to $2.99 billion from $3.83 billion. Reinvested earnings slid by 20.5 percent to $639 million from $804 million during the period.
“The lower cumulative net FDI contraction of 5.6 percent can be generally attributed to net inflows in equity capital investments (other than reinvested earnings) and debt instruments [in] May to August 2020,” the central bank said.
Net investments in equity capital expanded by 85.2 percent to $1.19 billion from $646 million year-on-year. Equity capital placements grew by 6.4 percent to $1.34 billion from $1.26 billion, while withdrawals sank by 75.7 percent to $151 million from $620 million.
Equity capital infusions in the eight months ending August came mainly from Japan, The Netherlands, the US and Singapore. These were placed mainly in the manufacturing, real estate, and financial and insurance sectors.
The BSP forecasts these job-generating investments to hit $4.1 billion this year, smaller than its previous estimate of $8.2 billion.