Hot money outflow hits 30-month high at $739 million

MANILA, Philippines — More foreign portfolio investments or speculative funds were pulled out of the Philippines in March, resulting in a net outflow of $739 million, the biggest in 30 months or since the $807.15 million outflow was recorded in September 2016, according to the Bangko Sentral ng Pilipinas (BSP).

Based on BSP data, the net outflow of foreign portfolio investments, also called hot or speculative money, last March was a complete reversal of the $1.13 billion net inflow recorded in the same month last year.

The BSP reported outflows of foreign portfolio investments surged by 85 percent to $2.47 billion from $1.34 billion, while inflows fell 29.8 percent to $1.73 billion from $2.47 billion.

About 66.5 percent of investments registered in March were in securities listed at the Philippine Stock Exchange (PSE) particularly in holding firms, food, beverage and tobacco companies, property firms, banks, and transportation services companies.

On the other hand, about 33.4 percent went to peso government securities, while 0.1 percent went to unit investment trust funds (UITFs).

By instrument, net outflows were recorded for all other investment instruments including PSE-listed securities with $379 million, peso government securities with $361 million, and other portfolio instruments with less than $2 million.

A net inflow of $2 million was noted for UITFs.

The BSP said the UK, US, Singapore, Luxembourg, and Hong Kong cornered 80.3 percent of the total gross inflows, while the US remained the biggest recipient of foreign portfolio investments pulled out from the Philippines with a share of 76.8 percent.

For the first three months of the year, the BSP said the Philippines booked a net inflow of $363.4 million or 52.5 percent lower than the $766.05 million recorded in the same period last year.

The central bank said gross outflows of hot money booked a double-digit growth of 10.7 percent to $4.84 billion from January to March from $4.37 billion in the same period last year.

On the other hand, gross inflows of speculative funds inched up by 1.3 percent to $5.2 billion from $5.14 billion.

Investors cashed in on their profits from both the equities and bond markets in the country as the BSP is expected to reverse its tightening cycle that saw interest rates rise by 175 basis points last year to prevent inflation from spiralling out of control.

Inflation eased to a 15-month low of 3.3 percent in March after peaking at 6.7 percent in September and October last year. The consumer price index averaged 5.2 percent in 2018 from 2.9 percent in 2017, and exceeded the BSP’s two to four percent target, due to elevated oil and food prices as well as the weak peso.

The BSP expects the Philippines to register a net outflow of foreign portfolio investments amounting to $200 million this year.

Last year, the country booked a net inflow of foreign portfolio investments worth $1.2 billion and reversed the net outflow of $195.4 million in 2017.

This was the highest in five years or since 2013 when the net inflow of speculative funds reached $4.22 billion.