‘Hot money’ outflows from PH financial markets surged in H1 due to pandemic
MANILA, Philippines — Bangko Sentral ng Pilipinas-registered foreign portfolio investments for June 2020 yielded net outflows of $235 million resulting from the $1.3 billion gross outflows and $1.0 billion gross inflows for the month.
This is smaller than the recorded net outflows of $1 billion in May, the regulator said Thursday.
The $1 billion registered investments for the month was more than twice the $486 million recorded for May 2020.
About 92.3 percent of investments registered were in Philippine Stock Exchange-listed securities (pertaining mainly to holding firms, property companies, banks, telecommunication firms and food, beverage, and tobacco companies.
The remaining 7.7 percent went to investments in peso-denominated government securities.
The United Kingdom, Singapore, the United States, Norway, and the Bahamas were the top five investor countries for the month, with combined share to total at 71.7 percent.
Outflows for June of $1.3 billion were lower compared to the level recorded for May of $1.5 billion, or by 15.9 percent. The US received 61.4 percent of total outflows.
Registered foreign portfolio investment transactions for the first six months of 2020 yielded net outflows of $3.3 billion resulting from the $9 billion gross outflows and $5.7 billion gross inflows for the period.
“This is larger than the $721 million net outflows noted for the same period last year brought about by uncertainties due, among others, to the impact of the COVID-19 pandemic to the global economy and financial system,” the central bank said.
The BSP added that the situation was aggravated by other key events earlier in the year such as the continuing geopolitical tensions between the US and Iran; ongoing trade negotiations between the US and China; and the renegotiation of the contracts of the country’s water concessionaires.
Meanwhile, year-to-date transactions for all investments — PSE-listed securities, peso-denominated government securities, and other investments — resulted in net outflows.
The BSP noted that registration of inward foreign investments 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 or affiliate foreign exchange corporations for repatriation of capital and remittance of earnings that accrue on the registered investment. Without this registration, the foreign investor can still repatriate capital and remit earnings on his investment, but the foreign exchange will have to be sourced outside the banking system.
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