Net ‘hot money’ inflows turned positive in February

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

According to the regulator, BSP-registered foreign portfolio investments for the second month of 2020 yielded net inflows of $40 million, resulting from the $1.37 billion in inflows and $1.33 billion in outflows during the month.

This is a reversal from the recorded net outflows of $486 million in January.

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

The central bank said 68.7 percent of the 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.

Top investors

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 of 72.8 percent.

Outflows for the month of $1.3 billion were lower compared to the level recorded for January of $1.7 billion, or a 22.5-percent decrease. The United States received 63 percent of total outflows.

Year-on-year unchanged

Developments for the month included the ongoing concern on the potential global economic impact of the coronavirus disease pandemic, 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 outflows were higher by 24.7 percent compared to the outflows recorded a year ago of $1.07 billion.

The net inflows recorded for February 2020 were lower compared to the $340 million net inflows recorded during the same period last year.

Registration optional

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 subsidiary/affiliate foreign exchange corporations for repatriation of capital and remittance of earnings that accrue on the registered investment.

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