‘Hot money’ leaves PH

Funds invested in local equity, bond and money markets continued to flow out of the country in the third week of February, accelerating a trend that reversed the net inflows of so-called “hot money” that was recorded in the first month of the year.

Data from the Bangko Sentral ng Pilipinas showed that $201.12 million in cash were withdrawn by overseas fund managers from the local equity, bond and money markets in the third week of February 2018. This followed “hot money” repatriations in the first and second weeks of the month with a net amount of $59.95 million and $159.21 million.

Thus, on a year-to-date basis, $258.11 million in net portfolio investments had already been withdrawn from the domestic financial system, this being the difference between gross hot money inflows of $2.23 billion and $2.49 billion in outflows.

The data also showed that this pace of outflows was significantly faster than the $27.52 million in hot money repatriations during the the first seven weeks of 2017.

For the entire 2017, BSP said that $16.06 billion in hot money entered the local investment scene, offset by $16.27 billion in repatriations by fund managers, resulting in a net outflow of $205.03 million for last year, which, in turn, helped push the country’s overall balance of payments further into the red.

BSP Governor Nestor Espenilla Jr. said earlier that the inward movement of hot money in January was “attributable to investor optimism over the passage of the first phase of the government’s tax reform program, positive news on corporate earnings and expected higher government spending for infrastructure projects.”