After 2-mo pause, ‘hot money’ pullout from PH resumes

A surge in hot money outflows in September reversed the economy’s gains of attracting more portfolio investments into local financial markets over the two previous months, data from the Bangko Sentral ng Pilipinas showed.

In a statement, the BSP said last month’s transactions yielded net outflows of $440 million, in contrast to the net inflows of $226 million in August and $113 million recorded a year ago.

“This may be attributed to investors’ continuing concerns on trade tensions between the United States and China, the weakening of the peso and the continued uptick in inflation which may have been aggravated by the effects of Typhoon “Ompong” (International codename: Mangkhut),” the BSP said.

Registered investments for September hit $743 million, a 33.7-percent decline from the $1.1 billion figure in August. Likewise, a 42.7-percent year-on-year decline was noted from the $1.3 billion in the same month last year.

Of the investments that were registered last month, 85.7 percent went to listed securities in the Philippine Stock Exchange (mainly to holding firms, banks, property companies, food, beverage and tobacco firms, and telecom companies). The balance went mostly to peso-denominated government securities (14.3 percent).

Net outflows were noted for all investment instruments. PSE-listed securities saw $351 million in outflows, $89 million for peso-denominated government securities and less than $1 million for other peso-denominated debt instruments.

The United Kingdom, the United States, Singapore, Switzerland and Malaysia were the top five investor countries for the month, with combined share to total of 81.8 percent.

Outflows for the month ($1.2 billion) were higher by 32.2 percent vis-a-vis August 2018 level ($895 million). A minimal decline of less than $1 million was noted when said amount was compared to the level recorded in September 2017 of $1.2 billion. The United States continued to be the main destination of outflows, receiving 73.7 percent of the total.

Registration of inward foreign investments with the BSP is optional under the liberalized rules on foreign exchange transactions.