$459 M hot money flows out in March

MANILA, Philippines - Foreign portfolio investments or hot money flowed out of the country in March as investors were driven away by continued uncertainties, such as the anticipated rate hike in the US and the trials faced by the local mining industry.

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that hot money for March registered a net outflow of $459.86 million, widening from a $409 million net outflow posted in February.

This was also a reversal of the net inflow of $482.43 million recorded in the same month last year.

The BSP said total outflows amounted to $1.83 billion, outpacing the $1.37 billion inflows during the month.

For the first three months, the net outflow of portfolio investments reached $567.54 million, also a turnaround from the $396 million in net inflow recorded in the same period in 2016.

Foreign portfolio investments or hot money are referred to as speculative funds controlled by investors who actively seek short-term returns and high interest rate investment opportunities.

“(The net outflow) is attributable mainly due to profit taking and continued uncertainties arising from international and domestic developments,” the BSP said.

These developments include the US interest rate hike and the closure and suspension orders on local mining companies issued by Environment Secretary Gina Lopez.

According to BSP data, portfolio investment inflows reached $1.37 billion in March, 19 percent lower than the $1.69 billion recorded last year.

It was, however, 40 percent higher than the $981.2 million in portfolio investment recorded in February this year.

“(This was) due to the much anticipated interest rate increase by the (US Fed) and the BSP’s decision to maintain the interest rate on the overnight reverse repurchase facility at three percent,” the BSP said.

About 84 percent of investments in March were securities from the Philippine Stocks Exchange (PSE), while the rest went to government securities and unit investment trust funds (UITF).

Top sources of investments during the period were the United Kingdom, US, Singaport, Belgium and Switzerland.

The BSP said both PSE-listed securities and government securities registered a net outflow of $320 million and $158 million, respectively, while net inflows of $18 million were noted for UITFs.