‘Hot money’ slinks away on terror fears

Slower-than-expected economic growth in the first quarter coupled with uncertainties brought about by developments here and abroad, including terror attacks, resulted in a $24.35-million net outflow of hot money in May, the Bangko Sentral ng Pilipinas (BSP) said Friday.

The $1.509-billion outflow of foreign portfolio investments last month exceeded the $1.485-billion inflows, reversing the net inflow of $51.49 million a month ago and $72.81 million in the same month last year.

The inflows in May this year were up 12.5 percent month-on-month, but down 16.8 percent year-on-year.

The outflows, meanwhile, were up 19 percent month-on-month “due to profit taking” but down 11.8 percent year-on-year, the BSP added.

GDP growth eased to 6.4 percent in the first quarter, the slowest expansion since the 6.3 percent posted in the fourth quarter of 2015.

The government had blamed the lower-than-expected economic growth to slower government spending and higher prices of consumer goods.

Also last month, almost four-fifths of the registered portfolio investments went to Philippine Stock Exchange-listed securities (mostly banks, food, beverage and tobacco companies, holding firms, property developers and utilities services providers), while 18.4 percent made their way to peso government securities and 2.5 percent to other peso debt instruments.

“Transactions in PSE-listed securities and other peso debt instruments yielded net inflows of $103 million and $35 million, respectively, while investments in peso government securities resulted in net outflows of $163 million,” the BSP said.

The top five sources of hot money were Luxembourg, Malaysia, Singapore, the United Kingdom and the United States, worth a combined 76.9 percent of the total.

The US attracted the hot money outflows, cornering 79.2 percent of the total.

The latest BSP data showed that from Jan. 2 to June 2, a year-to-date net outflow of $543.79 million in foreign portfolio investment was registered as the $6.924-billion outflow was more than the $6.381-billion inflow.

The reversal of the $178.46-million net inflow a year ago was blamed by the BSP on “continued uncertainties arising from domestic and international developments, such as the US airstrike against Syria, global terrorist attacks, the interest rate increase by the US Federal Reserve in March, and the closure order for several mining companies in the Philippines” last February.