Hot money continues to flee Philippines

MANILA, Philippines — More speculative funds continued to flee the Philippines from January to November due to uncertainties caused by the pandemic, according to the Bangko Sentral ng Pilipinas (BSP).

Data released by the central bank showed the net outflow of foreign portfolio investments or hot money amounted to $3.71 billion during the 11-month period – a sharp 135 percent increase compared to last year’s $1.58 billion.

The BSP attributed the withdrawal of foreign portfolio investments to the impact of the pandemic on the global economy and financial system, along with international and domestic developments such as geopolitical tensions, certain corporate governance issues, and extended quarantine measures in select regions in the country.

According to the BSP, year-to-date transactions for all investments, including securities listed on the main Philippine Stock Exchange (PSE), peso government securities and other investments resulted in net outflows.

Gross inflows of speculative funds plunged by 31.6 percent to $10.59 billion from January to November compared to last year’s $15.49 billion, while gross outflows declined by 16.1 percent to $14.31 billion from $17.07 billion.

Speculative investors continued to skip the Philippines amid the general risk off sentiment in the markets, prompting them to fly to haven countries. Foreign investors continued to liquidate portfolios and keep money in cash due to heightened worries over the adverse economic impact of the pandemic.

For November alone, the country incurred a net inflow for the second consecutive month with $226.75 million, reversing the net outflow of $354.32 million recorded in the same month last year.

Gross inflows of hot money surged by 31 percent to $1.56 billion in November from $1.19 billion in the same month last year, while gross outflows decreased by 13.7 percent to $1.34 billion from $1.55 billion.

The BSP said about 68.1 percent of investments registered were in PSE-listed securities, particularly in banks, property companies, holding firms as well as food, beverage and tobacco firms.

Data showed the remaining 31.9 percent went to investments in peso government securities.

Major sources that accounted for 82.4 percent of speculative funds last month include the United Kingdom, Singapore, US, Hong Kong and Norway.

The BSP now expects a net foreign portfolio investments inflow of $2.8 billion instead of $2.4 billion this year.

The BSP expects a net inflow of $3.5 billion next year.