FDI flows soften amid global uncertainty
From AB Capital's The Opening Bell: Three Moves
Event
Net foreign direct investment inflows fell to US$7.79bn in 2025, down 17% YoY and the lowest in five years. The decline was largely driven by a 27% drop in intercompany debt investments, while equity inflows and reinvested earnings showed modest improvement.
View
In our view, the weakness reflects tighter global liquidity, geopolitical uncertainty, and intensifying competition within ASEAN for investment capital. The drop in intercompany lending suggests multinational firms have become more cautious on funding expansion amid slower regional growth expectations.
Catalyst
The trajectory of global rates, oil prices, and supply chain realignment will shape inflows. If financial conditions ease and regional manufacturing relocation continues, FDI could gradually recover toward the BSP’s US$7.5bn projection for 2026. Sustained geopolitical volatility remains a downside risk.
Action
We remain selective on sectors linked to foreign capital inflows. Industrial property developers and logistics operators could benefit if manufacturing investments recover, while weaker FDI momentum may temper medium-term demand for office and large-scale infra-related projects.
Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.
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