MANILA, Philippines — Profit taking resulted in the biggest net outflow of foreign portfolio investments in almost a year with $563.21 million in speculative funds leaving the country in October.
The Bangko Sentral ng Pilipinas (BSP) reported yesterday inflows of foreign portfolio investments or hot money fell 15.3 percent to $1.38 billion in October from $1.63 billion in the same month last year.
For the first 10 months, the country registered a net outflow of $812.17 billion, reversing the net inflow of $1.47 billion recorded in the same period last year.
“This may be attributed to certain domestic and international developments including the interest rate hikes by the US Federal Reserve, global terrorist attacks, North Korea’s nuclear missile testing and the closure order for several mining companies in the country,” the central bank said.
Foreign portfolio investments are referred to as speculative funds controlled by investors who actively seek short-term returns and high interest rate investment opportunities.
About 89.8 percent of investments registered in October were in securities listed at the Philippine Stock Exchange (PSE) particularly holding firms, property companies, mining, banks, and food, beverage and tobacco companies.
The BSP said more than 10 percent went to peso government securities while the remaining 0.1 percent went to other peso debt instruments and peso time deposits.
The bulk or 81 percent of the inflows came from the US, the United Kingdom, Norway, British Virgin Islands and Luxemburg.
On the other hand, the central bank said outflows grew 23.8 percent to $1.95 billion in October from $1.57 billion in the same month last year due to profit taking.
It added 75.5 percent of the total funds pulled out from the Philippines during the review xxxx went to the US.
Overall, the BSP said the Philippines booked a net outflow of $563.42 million in October compared to a net inflow of $59.87 million in the same month last year.
The net outflow last month was the biggest since the $607.31 million recorded in November last year.
For the 10-month period, inflows slipped 14.7 percent to $13.43 billion compared to $15.75 billion in the same period last year while outflows remained steady at $14.24 billion from $14.28 billion.
The BSP sees a $900 million net outflow in hot money this year from a net inflow of $404.43 million last year.
BSP Governor Nestor Espenilla Jr. said the depreciation of the peso against the dollar has been a cause of some market unease.
Espenilla said the peso‘s moderate and controlled depreciation mirrors bullish economic growth indicated by strong imports demand, residents’ increased direct and portfolio investments abroad for expansion and risk diversification as well as public and private sector debt prepayments to manage foreign exchange risks.
“There is also outflow of hot money. We see these as healthy adjustments,” he said.