Hot money outflow recorded for 3rd straight month

MANILA, Philippines - Foreign portfolio investments started the year in the negative territory as investors shied away from emerging markets due to souring global economic prospects, the Bangko Sentral ng Pilipinas (BSP) reported on Thursday.

Investments - also called hot money for the ease they enter and exit financial markets - recorded a net outflow of $129.85 million in January.

This marked a reversal of $592.15 net inflow in the same month a year ago and was also the third straight month of losses since November last year.

A net outflow indicates more investments left than entered. Hot money is usually funneled into equity and bond markets.

"This may be attributed to global developments (economic slowdown in China, escalating tensions in the Middle East, geopolitical concerns in North Korea, and plunging oil prices) that adversely influenced over-all market sentiment," the BSP said in a statement.

Weakening growth sentiments and security concerns normally push investors away from emerging markets such as the Philippines toward safe haven nations like the US.

Broken down, registered inflows totaled $820.40 million, while outflows amounted to $950.25 million for the month.

About 89.3 percent of investments were channeled to the local bourse, particularly on listed holding firms, banks, food, beverage and tobacco companies, as well as utilities corporations.

A tenth entered government securities, while the rest went to private peso securities and time deposits, the central bank said.

The US continued to be the top source of inflows and destination for outflows. Other top countries where inflows were recorded were the UK, Singapore, Luxembourg and Belgium.

The BSP expects hot money to post a net outflow of $1.3 billion this year due to continued uncertainty in the global economy.

Last year, net outflows amounted to $599.7 million.