Converge IPO draws in ‘hot money,’ but not enough to stem year’s outflows

“Hot money” investments in the Philippines yielded net inflows of $439 million in October after seven consecutive months of net outflows starting March this year, according to the central bank.

Data provided by the Bangko Sentral ng Pilipinas (BSP) showed this development was a result of gross inflows of $1.4 billion, which outpaced the $913-million gross outflows for the month.

The figure is also a reversal of the recorded net outflows of $494 million in September.

“About 46.1 percent of investments in [Philippine Stock Exchange, or PSE]-listed securities for the month represented acquisition of shares in an information technology firm, which recently had its initial public offering (IPO),” the central bank said, referring to the share sale of Converge ICT Solutions Inc.

The $1.4 billion worth of registered investments for the month is 127.8-percent higher than the $594 million recorded last month, or an increment of $759 million.

Stock market

According to the BSP, 78.8 percent of investments registered were in PSE-listed securities pertaining mainly to information technology firms, banks, holding firms, property companies and food, beverage and tobacco firms.

The remaining 21.2 percent went to investments in peso-denominated government securities.

The United Kingdom, the United States, Singapore, Luxembourg and Hong Kong were the top five investor countries for the month, cornering 80.9 percent of the total.

The outflow of $913 million in October was also lower by 16 percent versus September’s level of $1.1 billion. The United States received 64.6 percent of total outflows.

Foreign portfolio investment transactions from January to October 2020 yielded net outflows of $3.9 billion resulting from the $12.9-billion gross outflows and $9-billion gross inflows for the period.

“This is larger than the $1.2-billion net outflows noted for the same period last year brought about by uncertainties due, among others, to the ongoing impact of the COVID-19 pandemic to the global economy and financial system coupled with international and domestic developments such as geopolitical tensions, certain corporate governance issues and extended quarantine measures in select regions in the country,” the central bank said.

Meanwhile, year-to-date transactions for all investments, or PSE-listed securities, peso bonds and other investments, resulted in net outflows.