‘Hot money’ net inflows drop 97% in Jan-April

MANILA, Philippines–More short-term investments fled the Philippines than those that entered it for the second month in a row — a phenomenon that regulators attributed to the delayed approval of the national budget, as well as economic jitters in the aftermath of last month’s strong earthquake.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said that registered foreign portfolio investment transactions for the month of April yielded net outflows of $299 million, resulting from gross outflows of $1.3 billion and gross inflows of $990 million. 

This follows similar net outflows of $739 million in March, which contributed to the year-to-date portfolio flow tally to a mere $37.27 million — representing a 97-percent drop from the $1.2 billion in net inflows recorded by the start of May last year.

“Gross inflows [in April] declined by 42.9 percent from the $1.7-billion figure in March 2019,” the central bank said. “This may be attributed to investor reaction to the delayed approval of the 2019 national government budget and the damage caused by the April 22 earthquake that jolted parts of Luzon and Visayas.”

Investors also stayed cautious amid the lack of fresh catalysts in the market and ongoing trade negotiations between the United States and China. 

About 79.2 percent of investments registered during the month were in PSE-listed securities (pertaining mainly to property companies, holding firms, banks, food, beverage and tobacco companies, and transportation services companies); while 20.8 percent went to peso government and the balance of about less than 1 percent went to peso time deposits. The United Kingdom, the US, Singapore, Hong Kong and Luxembourg were the top five investor countries for the month, with combined share to total at 84.8 percent. 

By instrument, net inflows of less than $1 million in April were noted for peso time deposits, while net outflows were recorded for all other investment instruments: securities listed on the Philippine Stock Exchange ($61 million); peso-denominated government securities ($238 million); other peso debt instruments and other portfolio instruments (each at less than $1 million). 

Gross outflows for the month ($1.3 billion) were lower by 47.8 percent vis-a-vis the March 2019 level ($2.5 billion). The US continued to be the main destination of outflows, receiving 71.1 percent of total remittances. 

Year-on-year, a 28.1 percent decline in gross inflows was noted from the $1.4 billion inflows recorded during the same month last year, while gross outflows increased by 17.5 percent from its $1.1 billion level in April 2018. (Editor: Jonathan P. Vicente)