PH posts $607-M ‘hot money’ outflow

Amid jittery markets following Donald Trump’s win in the US presidential election, the country posted a net outflow of so-called “hot money” in November worth $607.31 million.

The foreign portfolio investment outflow of $1.797 billion last November outpaced the $1.19-billion inflow, resulting in a net outflow dwarfing the $68.79 million posted in the same month last year, Bangko Sentral ng Pilipinas data released Thursday showed.

Many investors pulled out money amid uncertainty brought about by Trump’s victory in the Nov. 8 US polls, reversing the net inflow of $59.87 million posted last October.

BSP data showed that the hot money inflow and outflow registered in November actually grew 9.6 percent to $1.086 billion and 55.7 percent to $1.154 billion, respectively, year-on-year.

But compared with the preceding month, registered foreign portfolio investment last November dropped 27.1 percent from October’s $1.633 billion, which the BSP attributed to investor reaction to the following: the unexpected result of the presidential election and the widely anticipated interest rate adjustment in the United States; as well as weak local corporate earnings reports for the third quarter of 2016.

The outflow, meanwhile, rose 14.3 percent month-on-month from $1.573 billion in October,  as lingering concerns on another interest rate adjustment in the United States weighed on investor sentiment.

The BSP data as of Dec. 2 showed that the net inflow since the start of the year reached $672.73 million, a reversal of the $473.41-million net outflow a year ago.

The year-to-date total inflow of $16.673 billion exceeded the $15.999-billion outflow because of the following: an initial public offering by an industrial company; large net inflows in shares of two holding companies and a universal bank; and renewed interest in peso government securities, the BSP said.

“About 89.7 percent of investments registered in November were in Philippine Stock Exchange-listed securities (mainly pertaining to utilities companies, holding firms, property companies, banks, and food, beverage and tobacco firms); the remaining 10.3 percent went to peso government securities,” according to the BSP.

“The United Kingdom, the United States, Singapore, Malaysia and Luxembourg were the top five investor countries for the month, with combined share to total 76.3 percent. The United States continued to be the main destination of outflows, receiving 82.2 percent of total remittances,” the BSP added.

Foreign portfolio investments are in the form of placements in publicly listed shares, government and private sector IOUs, and deposit certificates.

Portfolio investments are considered short-term bets—hence the nickname hot money—because these placements may be pulled out quickly.

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