Speculative funds return as virus cases ease in November

MANILA, Philippines — More foreign portfolio investments or speculative funds reentered the Philippines in November compared to the previous months amid the continued reopening of the economy as COVID-19 cases declined.

Data released by the Bangko Sentral ng Pilipinas (BSP) showed the net inflow of foreign portfolio investments hit a five-month high of $109.56 million in November, the most since the $334.51 million inflow last June.

This also reversed the net outflow in September and October when daily COVID-19 infections reached record levels with the emergence of the Delta variant.

Foreign portfolio investments, also known as hot money, refer to purely speculative funds that quickly and regularly move within the global financial market as investors scout for higher short-term yields available.

While gross inflows declined by 17.9 percent to $1.25 billion in November from $1.56 billion in the same month a year earlier, the amount was 35.3 percent higher than the $949.58 million recorded in October.

The BSP said about 94.1 percent of investments coming mainly from the United Kingdom, US, Luxembourg, Hong Kong and Singapore were placed in securities listed on the Philippine Stock Exchange (PSE), mainly in holding firms; information technology; food, beverage and tobacco companies; banks, and property companies.

On the other hand, the central bank said gross outflows dipped by 12.5 percent to $1.17 billion from $1.34 billion. The United States received 62.6 percent of the speculative funds that exited the Philippines in November.

From January to November, the Philippines booked a lower net outflow of $535.91 million versus the $3.8 billion pulled out from the country in the same period in 2020.

During the 11-month period, gross inflows increased by 15.2 percent to $12.66 billion, while outflows declined by 10.8 percent to $13.2 billion.

The BSP has further lowered its net foreign portfolio investments inflow target to $1.5 billion instead of $4.3 billion for 2021 but retained this year’s target at $5.7 billion.