Hot money continues to flee Philippines

MANILA, Philippines — Speculative funds continued to exit the Philippines in September amid a spate of geopolitical issues which affected the flow of  hot money globally.

According to the Bangko Sentral ng Pilipinas (BSP), the country’s foreign portfolio investments yielded a net outflow of $231.71 million in September, pushing the net outflow for the nine-month period to $1.33 billion, nearly 17 times higher than the $74.67 million net outflow recorded in the same period last year.

The September figure, however, was lower compared to the $440.3 million net outflow recorded in September last year.

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

According to the BSP, some of the geopolitical issues affecting the flow of hot money into the country include the ongoing trade tensions between the US and China, attacks on oil facilities in Saudi Arabia that triggered the largest jump in oil prices in decades, further interest rate cuts by the US Federal Reserve and the impeachment inquiry against US President Donald Trump.

Based on BSP data, hot money inflows jumped by 75 percent to $1.3 billion in September from $743.31 million in the same month last year.

Of the total inflows, the BSP said more than 80  percent of investments went to securities being traded at the Philippine Stock Exchange (PSE) especially property developers, holding firms, banks, food, beverage and tobacco companies and transportation providers.

The balance of 19.8 percent went to investments in peso government securities.

According to the BSP, the top five investor countries during the review period were the United Kingdom, the US, Singapore, Malaysia and Luxembourg with a combined share of 72.3 percent.

On the other hand, outflows went up by 29.5 percent to $1.53 billion from $1.18 billion. Of the total withdrawals, about 75 percent went back to the US.

For the nine-month period, hot money inflows went up by 13.8 percent to $13.25 billion compared to $11.64 billion in the same period last year.

On the other hand, withdrawals jumped by 26.1 percent to $14.85 billion from $11.56 billion.

Based on the latest assessment of the BSP, monetary authorities expect a net inflow of $4 billion this year.

The country 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.