Foreign portfolio investments swung to a net outflow of $563.42 million in October mainly due to profit-taking, widening the year-to-date “hot money” outflows, the Bangko Sentral ng Pilipinas said Thursday.
Data showed that the $1.948-billion outflow of portfolio investment last month exceeded the $1.385-billion inflow, reversing the net inflows of $112.63 million in September as well as October last year’s $59.87 million.
The hot money inflows in October were nonetheless 6.8-percent higher than September’s $1.297 billion, which the BSP attributed to “investor optimism arising from the anticipated approval of the tax reform program of the government.”
The first tax reform package, aimed at slashing personal income tax rates while jacking up taxes on consumption, is expected to be approved by President Duterte before yearend.
However, last month’s inflows were lower than a year ago’s $1.633 billion.
“About 89.8 percent of investments registered during the month were in Philippine Stock Exchange-listed securities (pertaining mainly to holding firms, property companies, mining, banks, and food, beverage and tobacco companies); 10.1 percent went to peso government securities, while the 0.1 percent balance to other peso debt instruments and peso time deposits,” the BSP said.
“Transactions in the following instruments resulted in net outflows: PSE-listed securities, $513 million; peso government securities, $47 million; and peso time deposits, $4 million; while transactions in other peso debt instruments yielded net inflows of $1 million,” the BSP added.
Over four-fifths or 81 percent of foreign portfolio investment inflows that month came from British Virgin Islands, Luxembourg, Norway, the United Kingdom and the United States.
The net money outflows in October, meanwhile, rose 64.5 percent from $1.184 billion a month ago as well as increased 23.8 percent from $1.573 billion a year ago due to profit-taking, the BSP said.
The US remained the top destination of outflows, with a 75.5-percent share of total remittances.
As of Nov. 3, foreign portfolio investment stood at a net outflow of $812.17 million, as the $14.243-billion outflows surpassed the $13.431-billion inflows.
The year-to-date net outflow was a reversal of the $1.471-billion net inflow a year ago.
The BSP blamed “domestic and international developments (including the interest rate hikes by the US Federal Reserve, global terrorist attacks, North Korea’s nuclear missile testing and the closure order for several mining companies in the country)” for the year-to-date net outflow of hot money.
In June, the BSP retained its projection of a $900-million net outflow of portfolio investment by end-2017, more than double the $404.43 million posted in 2016.
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. /je