Outflow of foreign capital slows

THE AMOUNT of foreign capital that left the country declined in September from the previous month amid turbulent conditions in financial markets, regulators reported Thursday.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said the net outflow of foreign portfolio investments reached $323.98 million, an improvement from $524.54 million in outflows the previous month.

September’s net outflow was nearly identical to the figure in the same month in 2014. As a result of September’s tally, the country’s year-to-date outflow widened to over $400 million.

The BSP attributed the continued outflow to “profit taking and continued concerns on the slowdown of the Chinese economy and its impact on the global market.”

Markets were on edge last month due to anticipation of the US Federal Reserve’s planned rate increase, which would have been the first in nearly a decade.

The US Fed has decided to keep its rates steady.

Foreign portfolio investments, also known as “hot money,” are placements in local stocks, bonds, and deposit certificates. The nickname is in reference to the speed at which these investments can enter and exit local markets.

About 81 percent of gross investments registered in September were in PSE-listed securities, mainly pertaining to holding firms, property companies, banks, food, beverage and tobacco firms and telecommunication companies.

The balance of 19 percent were in peso-denominated government securities. Transactions in peso government securities yielded a net inflow of $133 million, while a net outflow was recorded for PSE-listed securities, $445 million and other peso denominated debt instruments, $11 million.

The United Kingdom, the United States, Singapore, Belgium, and Hong Kong were the top five investor countries for the month, with a combined share of 81.5 percent.

The United States, on the other hand, continued to be the main destination of outflows, receiving 84.1 percent of the total.