‘Hot money’ inflow into PH goes positive in February 2020

More short term investments flowed into the Philippines in February than those that left, reversing negative net outflow that was recorded at the start of the year, according to the Bangko Sentral ng Pilipinas (BSP).

BSP-registered foreign portfolio investments for the second month of 2020 yielded net inflow of $40 million, resulting from $1.37 billion in inflow and $1.33 billion outflow for the month.

This is a reversal of the net outflow of $486 million in January.

The US$1.4 billion registered investments reflected an 11.3-percent increase from the $1.2 billion figure in January 2020.

The central bank said that 68.7 percent of investments registered during the month were in Philippine Stock Exchange-listed securities pertaining mainly to shares in holding firms, property companies, banks, transportation services firms, and food, beverage and tobacco companies.

The remaining 31.3 percent went to investments in peso-denominated government securities.

The United Kingdom, Singapore, the United States, Luxembourg and Japan were the top five investor countries for the month, with combined share totalling 72.8 percent.

Outflow for February of $1.3 billion was lower compared to the level recorded for January of $1.7 billion, or a 22.5-percent decrease. The US received 63 percent of total outflow.

Developments for the month included the ongoing concern on the potential global economic impact of the COVID-19 disease outbreak, and the release of 2019 corporate earnings report of several listed firms.

Year-on-year, registered investments were broadly unchanged at 2.5 percent lower than the $1.41 billion level recorded in February 2019. Gross outflow was higher by 24.7 percent compared to outflow recorded in 2018 of $1.07 billion.

The net inflow for February 2020 was lower compared to $340 million in February 2019.

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

The issuance of a BSP registration document entitles the investor or his representative to buy foreign exchange from authorized agent banks or their subsidiaries for repatriation of capital and remittance of earnings to mother companies.

Without this, a foreign investor can still repatriate capital and remit earnings on his investment but the foreign exchange will have to be from outside the banking system.

Edited by TSB