Filipino residents’ foreign portfolio investments declined by 13 percent in the first semester of 2013 on the account of the uncertainties brought by the tapering of the bond-buying program of the United States Federal Reserve, data released by the Bangko Sentral ng Pilipinas (BSP) showed on Thursday.
According to the Summary Results of the end-June 2013 Coordinated Portfolio Investment Survey, residents’ foreign portfolio investments went down to $5.9 billion from the $6.787 billion recorded in end-December 2012.
The BSP survey showed that residents’ foreign portfolio investments consisted of holdings of equity securities ($99.4 million) and debt securities ($5.8 billion) that were issued by unrelated nonresidents.
It noted that “a nonresident counterparty is considered as unrelated to the resident enterprise if the counterparty has an equity interest of less than 10 percent in the enterprise, or vice-versa.”
“If the counterparty’s share is 10 percent or more in the resident enterprise’s equity, it is considered a related nonresident. In the latter case, transactions in equities and debt securities between the counterparty and the resident enterprise are classified as direct investments,” it added.
The central bank data showed that contributing to the decline in residents’ foreign portfolio investments was the decrease in residents’ holdings of long-term debt securities, which declined by 15.9 percent to $4.579 billion from end-December 2012’s $5.448 billion.
Meanwhile, short-term debt securities went down by 2.2 percent to $1.22 billion from end-December 2012’s $1.25 billion.
In particular, holdings of bonds contributed 8.3 percentage points to the total 13-percent decline, the central bank data showed.
“The decrease in residents’ holdings of foreign portfolio investments may be attributed to the market reaction on the possible scaling down of the US Federal Reserve’s quantitative easing measures,” the survey stated.
US as top issuer
Furthermore, the survey showed that United States remains as top country-issuer of securities held by residents.
Securities issued by the US still comprised the biggest percentage share of residents’ foreign portfolio investments.
Despite the 9.9-percent decline in residents’ holdings of US-issued securities, its share to total increased to 37.2 percent compared to 35.9 percent in end-December 2012.
Other top country-issuers of securities were Indonesia with 14.8-percent share, and Cayman Islands with a share of 4.8 percent, compared to 3.4 percent as of end-December 2012.
Meanwhile, the survey said that an increase in residents’ holdings of securities was observed only for issuances by Cayman Islands (20.9 percent), Germany (19.3 percent) and international organizations (10.4 percent).
These increases, the BSP data showed, were more than offset by the declines in residents’ holdings of securities issued by unrelated nonresidents in South Korea (46.2 percent), China (38.7 percent), Indonesia (14.5 percent) and the US (9.9 percent), among others.
On the other hand, the survey said that the bulk of residents’ foreign portfolio investments (91.1 percent) were denominated in US dollars.
The rest of residents’ investments were denominated in Australian dollars, euro, Japanese yen, Chinese yuan, and in other currencies such as the Singapore dollar, Indonesian rupiah, Hong Kong dollar, Canadian dollar and Thailand baht.