‘Hot money’ outflows outpace inflows

More of the so-called hot money fled the country during the first 10 days of February as investors bet on expectations of sustained US growth even under a Trump presidency while shying away from local markets amid mining firms’ woes.

The latest Bangko Sentral ng Pilipinas data showed that on Feb. 1-3, the country posted a net outflow of foreign portfolio investments worth $84.37 million, as the outflow of $227.05 million outpaced the $142.68-million inflow.

During the week of Feb. 6-10, another net outflow of $52.76 million was recorded, as the $300.51-million outflow exceeded the inflow of $246.75 million.

Foreign selling was noted in the first two weeks of the month of February with the Philippine Stock Exchange while the peso struggled given recent domestic and international developments.
“The period saw the release of upbeat economic data from the US, the Bangko Sentral ng Pilipinas’ [policy] meeting and the Fed meeting. Comments from Donald Trump suggesting that he would enact substantial fiscal measures prompted investors to dump the peso and Philippine assets,” an economist said.

In the meantime, the PSE moved sideways despite the adverse impact on the mining sector of the ongoing debacle surrounding the closure of major mines in the country, he added.

Early this month, Environment Secretary Regina Paz Lopez ordered the closure of 23 mines and the suspension of five mining operations in 10 provinces.

A week later, Lopez also ordered the cancellation of 75 mineral production sharing agreements entered into by the government with mining firms.

To date, a net inflow of foreign portfolio investments worth $164.2 million was registered as the $1.538-billion inflow from Jan. 1 to Feb. 10 was more than the $1.373-billion outflow.

In January, a net inflow of $301.33 million was posted, which the BSP attributed to optimism among investors amid sustained robust economic growth. It was last month when the government announced that the economy expanded by 6.8 percent in 2016. —BEN O. DE VERA