Short-term portfolio investments continued their exodus from the Philippine financial system for the fourth consecutive month in June as fund managers liquidated their assets and repatriated the proceeds from stock market and fixed-income investments during this period.
In a statement, the Bangko Sentral ng Pilipinas said net outflows of so-called “hot money” hit $35 million in June — a substantial improvement over the $750-million in net outflows in the previous month.
All told, local financial markets have experienced net outflows of $721 million in the first half of 2019, a reversal of the $323 million in net inflows a year ago.
The central bank attributed the narrower hot money deficit in the first six months of the year to the improved domestic inflation data for May which was within the government’s target of 2-4 percent; the resumption of trade talks between the United States and China during the recently held G20 meeting in Japan, and possible interest rate cuts of the US Federal Reserve.
BSP-registered investments for June amounted to $1.4 billion, reflecting a 14.1-percent increase from the $1.2 billion last month.
A total of 73.6 percent of investments registered during the month were in Philippine Stock Exchange-listed securities, mainly property companies, holding firms, banks, food, beverage and tobacco companies and telecommunication firms. Another 26.4 percent went to peso-denominated government securities.
The United Kingdom, Malaysia, Singapore, the United States, and Hong Kong were the top five investor countries for the month, with combined share to total of 82.2 percent.
Outflows for the month of $1.4 billion were 27.2 percent lower than the $2 billion recorded for May 2019. The United States received 69 percent of total outflows.
Overall, transactions for the month yielded net outflows of $36 million. By instrument, transactions in peso government securities yielded net inflows of $104 million, while net outflows were recorded for transactions in PSE-listed securities ($139 million), and other peso debt instruments and other portfolio instruments, each at less than $1 million.
Year-on-year, a 55-percent increase in gross inflows was noted from the $911 million recorded in the same month last year. Similarly, gross outflows were 1.4 percent higher than that recorded for June 2018 ($1.43 billion). On the other hand, the net outflows for the month decreased compared to the net outflow of $516 million noted for June 2018.