A combination of uncertainty in the mining sector and in local politics drove away short-term foreign investments or the so-called “hot money” during the first 24 days of February, the latest Bangko Sentral ng Pilipinas data showed.
During the week Feb. 20 to 24, the country posted a net outflow of foreign portfolio investment worth $69.17 million as the $314.85 million in outflow exceeded the $245.68 million that went out.
It was the fourth straight week of net outflow, following Feb. 1 to 3’s $84.37 million, Feb. 6 to 10’s $52.76 million and Feb. 13 to 17’s $191.73 million.
For the period Jan. 1 to Feb. 24, portfolio investment inflow totaled $2.03 billion, but was surpassed by outflow worth $2.12 billion, resulting in a year-to-date net outflow of $96.69 million.
“The heaviest drag on the [Philippine Stock Exchange] index in terms of net foreign selling remained the mining and oil sector as the ongoing debacle with the environmental secretary remains unsettled,” an economist said, referring to Regina Lopez, who in February ordered the closure of 23 mines and the suspension of five others.
An interagency review on Lopez’s orders and all other mining contracts nationwide is ongoing.
Also, “other index heavyweight sectors were also sold off as investor sentiment toward the Philippines appears to have soured,” the economist added.
“The surge in equities during the Aquino administration can in part be attributed to the dual improvement in the Philippines’ economic and political situation, resulting in the Philippines achieving rockstar status in the region. Currently, despite still solid economic fundamentals, we can only surmise that foreign investor sentiment has turned given political uncertainty with critics of the President castigated, prosecuted and threatened,” the economist explained.
For instance, Sen. Leila De Lima, a staunch critic of President Duterte’s war against illegal drugs and the extrajudicial killings of drug suspects, was arrested last Feb. 24 for her alleged involvement in illegal drug trade.
Fitch Group’s BMI Research last Monday said it believed that De Lima’s arrest as well as the removal from committee chairmanships of a number of senators perceived to be against the President were “likely to raise the risk of political instability in the country.” —BEN O. DE VERA