BSP: Hot money back to net outflow in September

MANILA, Philippines — Foreign portfolio investments – also known as hot money – into the Philippines reverted to a net outflow in September, the Bangko Sentral ng Pilipinas (BSP) said.

In a report, the BSP said the country posted a net hot money outflow of $24.16 million in September, a reversal of the $11.51 million net inflows in August.

The September outflows, however, were way lower than the $493.65 million foreign fund exit a year ago.

The BSP said gross inflows doubled to $1.19 billion in September from $594.02 million a year ago, on fresh capital infused in listed firms, mostly in food and beverage, holding firms, property, telecommunications, tobacco and utilities. Some of the speculative or short-term funds went to peso bonds issued by the government.

The bulk of the funds were traced from investors located in the UK, US and Switzerland. Likewise, the Philippines received hot money from Hong Kong and Singapore making these five sources account for over 84 percent of gross inflows.

On the other hand, gross outflows grew by more than 11 percent to $1.21 billion in September from $1.08 billion a year ago.

According to the BSP, nearly 71 percent of the withdrawals went to the US.

From January to September, the Philippines yielded a net outflow of $494.13 million, dropping by about 89 percent from $4.47 billion a year ago.

Inflows during the period increased by over 32 percent to $10.2 billion. Outflows, on the other hand, declined by around 12 percent to $10.69 billion.

Under the rules on foreign exchange transactions, investors maintain the freedom on whether to register their inward investments with the BSP. It is only required if the investors will buy foreign exchange from authorized agent banks for repatriation of capital or remittance of earnings.

Without such registration, the foreign investors can move the capital and remit earnings on their investments, but the foreign exchange needs to be sourced outside of the banking system.