More hot money exits Philippinesin 7 months

MANILA, Philippines — Foreign portfolio investors continued to shun the Philippines as net outflows reached $671.5 million in the first seven months, reversing the net inflow of $458.55 million in the same period last year, according to the Bangko Sentral ng Pilipinas (BSP).

This despite the $15.02 million net inflow recorded in July that ended four straight months of net outflows.

From January to July, gross inflows rose by only 8.7 percent to $10.67 billion from $9.81 billion in the same period last year, while gross outflows surged by 21.3 percent to $11.34 billion from $9.35 billion.

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

Hot money are being pulled out from emerging markets including the Philippines due to the trade war between the US and China.

For July alone, gross inflows jumped by 75.2 percent to $1.68 billion from $959.44 million.

The BSP said about 76.5 percent of investments registered in July were in listed securities at the Philippine Stock Exchange (PSE) and were channeled mainly to banks, holding firms, property companies, retail firms, and food, beverage and tobacco companies.

The central bank said the 23.5 percent balance went to investments in peso government securities.

The United Kingdom, Hong Kong, US, Norway and Malaysia were the top five investor countries with a combined 75.6 percent share of the total.

On the other hand, gross outflows surged by 83.8 percent to $1.66 billion in July from $906.15 million in the same month last year.

The BSP said the US received 77.8 percent of total outflows in July.

The central bank traced the net inflow in July to the better-than-expected inflation data for the month of June coupled with easing domestic inflation for the second quarter as well as the stronger peso forecast.

Based on its latest assessment, the BSP now expects a net inflow of foreign portfolio investments of $4 billion instead of a net outflow of $200 million this year.

The Philippines booked a net outflow of foreign portfolio investments amounting to $205.03 million last year, reversing the net inflow of $404.43 million in 2017 as inflation overshot the BSP’s two to four percent target, while trade tension between the US and China continued to escalate.

The BSP has so far slashed interest rates by 50 basis points due to the continued downtrend in inflation as well as the slower-than-expected gross domestic product (GDP) growth in the first half of the year.

Inflation averaged 3.3 percent in the first seven months, well within the BSP’s two to four percent target, after easing to a 31-month low of 2.4 percent in July from 2.7 percent in June.

The peso gained 3.5 centavos yesterday to close at 52.255 to $1 from Tuesday’s 52.29 to $1. It opened stronger at 52.25 and hit an intraday low of 52.32. Volume amounted to $1.27 billion.