Sept ‘hot money’ outflow eases

The net outflow of short-term investments from the Philippines was halved in September compared to the same period last year, but the total year-to-date exodus of foreign portfolio investments continued to rise, according to data from the central bank.

According to the Bangko Sentral ng Pilipinas, net outflows of $232 million were recorded in September as a result of the $1.5-billion outflows which more than offset the $1.3 billion inflows for the month. This figure is an improvement, however, from the net outflows of $392 million recorded in August 2019.

From the start of the year to the first week of October, $1.33 billion in net outflows were recorded by the central bank compared to $74.6 million in net inflows during the same period in 2018.

For September alone, the $1.3 billion registered investments reflected a 7.2-percent increase from the $1.2 billion figure in August.

About 80.2 percent of investments registered during the month were in Philippine Stock Exchange-listed securities (pertaining mainly to property companies, holding firms, banks, food, beverage and tobacco companies, and transportation firms) while the remaining 19.8 percent went to investments in peso-denominated government securities.

The United Kingdom, the United States, Singapore, Malaysia and Luxembourg were the top five investor countries for the month, with combined share of 72.3 percent.

On the other hand, outflows for the month of $1.5 billion were slightly lower compared to the level recorded for August 2019 of $1.6 billion or by 4.5 percent.

The United States received 75 percent of total outflows.

Domestic and international developments for the month included the ongoing trade tensions between the United States and China; attacks on Saudi Aramco’s oil facilities in Saudi Arabia which triggered the largest jump in oil prices in decades; the US Federal Reserve’s decision to cut interest rates; the BSP’s decision to cut interest rates and the reserve requirements ratio of banks; and the impeachment inquiry against US President Donald Trump.

Year-on-year, registered investments were 75.1-percent higher than the $743 million level recorded in September 2018. Similarly, gross outflows were higher than the outflows noted a year ago ($1.2 billion or by 29.5 percent). In contrast, net outflows for the month were lower from the net outflows by $440 million noted for the same period a year ago.