‘Hot money’ fled PH in Jan-Aug on trade war fears, slower GDP growth

Short-term portfolio investments fled local financial markets in August resulting in large net outflows for the first eight months of the year—a phenomenon that the central bank attributed to fears of a US-China trade war combined with the lackluster performance of the Philippine economy in the first half.

According to data from the Bangko Sentral ng Pilipinas, the economy saw $391.7 million in net outflows of so-called hot money last month, which was a reversal of the $225.8 million in net inflows recorded during the same period last year.

Because of this, net portfolio outflows for the first eight months of 2019 reached $1.1 billion, marking a sharp contrast versus the $602-million net inflow recorded during last year’s January to August period.

A closer examination of the numbers showed that BSP-registered investments in August hit $1.2 billion, down 27.8 percent from $1.7 billion in July.

About 75.7 percent of investments registered during the month went to Philippine Stock Exchange-listed securities, mainly property companies, holding firms, banks, food, beverage and tobacco, and transportation firms; while 24.3 percent accounted for investments in peso-denominated government securities.

The United Kingdom, Singapore, the United States, Malaysia, and Hong Kong were the top five investor countries for the month, with combined share to total at 73.9 percent.

Outflows for the month of $1.6 billion were slightly lower compared to the $1.7 billionrecorded in July 2019. The United States received 78 percent of total outflows.

Overall transactions for August 2019 yielded net outflows of $392 million, in contrast to the net inflows of $15 million in the previous month.