$400M in foreign capital pulled out of PH in June

Nearly $400 million in foreign capital pulled out of local stocks and bonds in the last three weeks of June following signals that the US Federal Reserve will soon end its easy money policy, data released on Thursday showed.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said net outflows of foreign portfolio investments were recorded from June 10 to 28, totaling $397.06 million.

This offset the net inflows in the first week of June of $374.09 million, resulting in a net outflow of $22.9 million for the entire month.

Foreign portfolio investments are often referred to as “hot money” because these can be pulled out just as fast as they enter the country.

However, monetary officials remained optimistic, saying that total net investment for the first half of the year was still at $1.55 billion, up from just $896.46 million in the same period in 2012.

Excluding outflows, total gross investment for the month also reached $2.84 billion, more than double the $1.21 billion recorded in June last year.

“The transactions… were a knee jerk reaction of investors to the pronouncement of the US Federal Reserve and considered a healthy market correction after surges in inflows, particularly in April this year,” the BSP said.

The BSP said news of the US Fed’s unwinding triggered a selloff that resulted in a net outflow of $541 million from shares listed on the Philippine Stock Exchange (PSE).

These outflows were offset partly by net inflows in peso-denominated government debt and time deposits that reached $491 million and $27 million, respectively.

For local shares, $889 million flowed into holding firms, $270 million in local banks, $219 million in food companies, $207 million in beverage and tobacco makers, and $140 million went to telcos.

The United Kingdom, the United States, Luxembourg, Singapore, and Hong Kong were the top sources of investments, with the five countries making up 80.4 percent of the funds that entered the country.

Of the funds that pulled out of the country, $2.3 billion returned to the United States, the BSP said.