PH posts $107M in net ‘hot money’ inflow

Foreign portfolio investments swung to a net inflow of $107.71 million in November on the back of positive economic developments, narrowing the year-to-date “hot money” outflows.

Despite this, the Bangko Sentral ng Pilipinas is projecting a bigger net outflow of $2.5 billion at the end of the year, compared to its previous forecast of $900 million. This, the BSP said, was in view of “the possible series of rate hikes by the US Federal Reserves.”

BSP data released Friday night showed that last month’s $1.129 billion in portfolio investment inflows exceeded the $1.021 billion in outflows, reversing the net outflows of $607.31 million in November last year and $563.42 million in October.

In a statement, the BSP attributed the net inflow of hot money in November to the “positive investor reaction to news of favorable third-quarter corporate earnings; outcome of and pronouncements during the recently concluded 31st Asean Summit, and the Senate approval of a higher personal income tax exemption of P250,000 yearly, as part of the Senate version of the government’s tax reform program.”

Also in November, the government announced that the gross domestic product grew by a better-than-expected 6.9 percent in the third quarter.

The BSP nonetheless noted that the foreign portfolio investment inflows last month were down 5.2 percent from November last year’s $1.19 billion and 18.5 percent lower than October’s $1.385 billion.

“About 80.8 percent of investments registered during the month were in Philippine Stock Exchange-listed securities (pertaining mainly to holding firms, banks, food, beverage and tobacco companies, property companies, and utilities firms). The balance of 19.2 percent went to peso government securities whose transactions yielded net inflows of $213 million. Meanwhile, transactions for the following instruments resulted in net outflows: PSE-listed securities, $105 million, and other peso debt instruments, less than $1 million,” the BSP said.

Almost three-fourths of the portfolio investment inflows in November came from Luxembourg, Norway, Singapore, the United Kingdom and the United States.

Hot money outflows also dropped 43.2 percent from $1.797 billion a year ago and went down 47.6 percent from $1.948 billion a month ago.

The US remained the top destination of foreign investment portfolio outflows from the Philippines, cornering 90.3 percent of the month’s total.

The latest BSP data showed that from Jan. 2 to Dec. 1, the $15.227-billion portfolio investment outflows surpassed the $14.592-billion inflows, resulting in a net outflow of $634.53 million.

The year-to-date net outflow reversed the $672.73 million in net inflow last year.