Hot money outflows hit $1.6 billion in 11 months

Lawrence Agcaoili - The Philippine Star

MANILA, Philippines — More speculative funds flowed out of the country from January to November amid the raging US-China trade war, the rebalancing of global funds, as well as the start of the impeachment hearings on US President Donald Trump.

The Bangko Sentral ng Pilipinas (BSP) reported yesterday net outflows of foreign portfolio investments or hot money reached $1.57 trillion from January to November, reversing the net inflows of $925.95 million recorded in the same period last year.

Inflows grew by only 7.2 percent to $15.49 billion during the 11-month period from a year-ago level of $14.45 billion, while outflows surged by 26.1 percent to $17.06 billion from $13.53 billion.

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

BSP Governor Benjamin Diokno said he is not keen on the entry of hot money or speculative funds in the Philippines. He called this type of funds as “destabilizing.”

“That what’s called hot money, we don’t want hot money. They are taking advantage of the Philippines. They come in when things are good and then they exit as soon as things are bad at a click of a button,” the BSP chief said.

For November alone, net outflows of foreign portfolio investments amounted to $345.26 million compared to a net inflow of $832.1 million booked in the same month last year.

Inflows plunged by 41.4 percent to $1.19 billion in November from $2.04 billion in the same month last year, while outflows jumped by 27.5 percent to $1.15 billion from $1.21 billion.

About 86.4 percent of investments in November were invested in companies listed at the Philippine Stock Exchange (PSE) particularly to holding firms, banks, property companies, food, beverage and tobacco firms, and transportation services companies.

The remaining 13.6 percent went to investments in peso government securities.

The United Kingdom, US, Singapore, Hong Kong, and Luxembourg were the top five investor countries for the month, accounting for a combined share of 78.6 percent.

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