Phl’s international investment position dips

MANILA, Philippines - The country’s international investment position worsened in end-June due to the increase in foreign direct and portfolio investments, the Bangko Sentral ng Pilipinas reported yesterday.

Preliminary data showed the country’s net liability position at $48.2 billion in end-June, higher than the $44.5 billion recorded in end-March.

The BSP said this was due to the a $7.7-billion rise in total external financial liabilities to $187.1 billion in end-June, which was more than the $3.9-billion increase in total external financial assets to $138.9 billion.

The IIP summarizes a country’s stock of financial claims and financial liabilities with the rest of the world. It is a companion framework to the balance of payments (BOP) data, which is a record of the country’s transactions with the rest of the world.

By sector, the BSP was the only one that recorded a net external asset position at $79.7 billion in end-June, up from $78.3 billion in end-March.

Banks had a net liability position of $9.9 billion in end-June, while the general government also recorded a net liability position of $37.3 billion during the period.

Other sectors continued to hold the bulk of the resident’s total liabilities to foreigners as its net liability position settled at $80.7 billion in end-June. The central bank said these liabilities were made up mostly of foreign direct investments and portfolio investments.

The higher net liability of other sectors in end-June versus the $76.1 billion recorded in end-March was also due to a rise in equity holdings of foreigners.

 “The increase in outstanding equity securities held by non-residents was attributed largely to changes in asset prices arising from the six percent increase in the Philippine Stock Exchange index which closed at 6,8441.31 points on June 30 from 6,428.71 on March 31,” the BSP explained.

Moreover, the central bank added this was supported by “the appreciation of the peso against the US dollar by 2.7 percent, closing at P43.78:$1 as of end-June from P45.996:$1 as of end-March.”

In 2013, the country saw a net liability position of $40.7 billion, slightly unchanged from the $40.6 billion recorded in 2012, amid sustained inflows of foreign direct investments.

“Amid volatilities in the global environment, the confidence of foreign investors in the country’s macroeconomic fundamentals remained strong as the country received a credit rating upgrade by Moody’s from Baa3 to investment grade status of Ba1 in October 2013,” the BSP said.

“This reflected in the expansion in the stock of liabilities, particularly foreign direct investments and equity securities which increased by 14.3 percent and 5.7 percent, respectively,” the BSP added.