Hot money inflow surges in Nov

MANILA, Philippines — More foreign portfolio investments flowed into the Philippines in November, reversing the strong outflows in the previous months due to the positive reaction of investors to easing oil prices and the tightening cycle by the Bangko Sentral ng Pilipinas (BSP).

Data released by the central bank over the weekend showed net foreign portfolio investments inflow of $832.07 million in November, or almost eight times the $107.71 million recorded in the same month last year.

Last month’s net inflow reversed the $440.3 million and $67.83 million net outflows booked in September and October.

Foreign portfolio investments are also called hot or speculative money because of its flighty nature.

The BSP cited positive investors’ reaction to the decreasing global oil prices as well as the decision of the BSP to raise interest rates to curb rising inflationary pressures.

The BSP data showed hot money inflows soared by 80.5 percent to $2.04 billion in November from $1.13 billion in the same month last year.

About 66.8 percent of investments registered during the month were in securities listed at the Philippine Stock Exchange (PSE) particularly food, beverage and tobacco companies holding firms, property companies, banks, and utilities companies.

On the other hand, 33.2 percent balance went to peso government securities.

The central bank said transactions in PSE-listed securities yielded net inflows of $332 million in November, while that of peso government securities booked higher net inflows amounting to $510 million.

Major sources of speculative funds are the United Kingdom, Singapore, US, British Virgin Islands, and Cayman Islands with combined share to total at 83.5 percent.

The BSP said outflows increased by 18.6 percent to $1.21 billion in November from $1.02 billion in the same month last year. The US continued to be the main destination of outflows, receiving 84.8 percent of total remittances.

From January to November, net inflows of foreign portfolio investments reached $925.95 million, reversing the net outflow of $634.53 million in the same period last year.

Foreign portfolio investments inflow was steady at $14.45 billion in the first 11 months, while outflows declined by 11.2 percent to $13.53 billion from $15.23 billion.

The country booked a net outflow of $205.05 million last year, reversing the net inflow of $404.43 million in 2016 as more capital were repatriated from the country due to the series of rate hikes in the US.

For this year, the BSP now expects a smaller net outflow of foreign portfolio investments amounting to $100 million instead of $900 million this year.