NextGen Day

The Bangko Sentral ng Pilipinas (BSP) said Friday that net foreign direct investments (FDIs) were USD 793 million in November 2022.

The central bank reported that compared to net FDI inflows of USD 1.4 billion in November 2021, net FDI inflows in November 2018 decreased by 43.6 percent.

“This came about as a result of the decline in non-residents’ net investments in debt securities and reinvested profits. For the third straight month, net placements of equity capital increased year over year “BSP released a statement.

Michael Ricafort, the economist of Rizal Commercial Banking Corp. (RCBC), suggested that the decline in net inflows may be related to larger base effects in November 2021, when interest in investments resumed following the start of the epidemic in 2020.

According to Ricafort, “the slowdown in the net FDI data may also be related to higher short-term interest rates and the peak in long-term interest rates in the United States/globally/locally around October-November 2022.” These events, he continued, boosted borrowing costs.

He also said that the potential US recession will have a negative impact on investment activity in the second half of 2022.

Furthermore, according to the BSP, the US, Singapore, and Japan will be the main countries for equity capital placements in November 2022.

Manufacturing, information and communication, and real estate industries are the top sectors for equity capital placements for the month.

“The total FDI net inflows for the year to date have also decreased, falling from USD 9.7 billion in the first eleven months of 2021 to USD 8.4 billion, a 13.4 percent decrease. Non-residents’ net placements of equity capital climbed during the period, while their net investments in debt instruments and reinvestment of earnings decreased by component “said the central bank.

In the meantime, President Ferdinand R. Marcos Jr.’s recent international travels, including this week’s five-day official working visit to Japan, presented promising future prospects for the country’s FDI inflows, according to RCBC’s Ricafort.

Investment commitments, particularly if realized or monetized, from the new administration’s numerous international trips “could also help generate more investments (FDIs), jobs/employment, infrastructure spending/projects, trade (exports and imports), foreign tourism, and business/economic opportunities that add to the overall economic/GDP growth and development, as well as support higher investment valuations, thereby also supporting sentiment on the local financial markets,” the study found.

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