PH hot money inflows up in Nov, but 11-month tally still in the red

More short term investments entered the country’s financial markets than those that left in November 2020, marking the second consecutive month of positive movement for these so-called hot money investments, according to the central bank.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said foreign portfolio investments registered with the agency yielded net inflows of $227 million, resulting from the $1.6 billion in gross inflows and $1.3 billion in gross outflows for the month.

This is lower than the net inflows of $439 million recorded in October 2020.

The $1.6 billion registered investments for November reflected a 15.7-percent growth compared to the $1.4 billion recorded last month, or by $213 million.

A total of 68.1 percent of investments registered were in Philippine Stock Exchange-listed securities, pertaining mainly to banks, property companies, holding firms, food, beverage and tobacco companies and retail firms, while the remaining 31.9 percent went to investments in peso government securities. The United Kingdom, Singapore, the United States, Hong Kong and Norway were the top five investor countries for the month, with combined share to total at 82.4 percent.

Meanwhile, outflows for the month of $1.3 billion were higher compared to the level recorded for October of $913 million, or by 46.6 percent, with the United States receiving 74.7 percent of total outflows.

All told, foreign portfolio investment transactions for the 11 months to November 2020 yielded net outflow of $3.7 billion resulting from the $14.3 billion gross outflows and $10.6 billion gross inflows for the period. This is larger compared to the $1.6 billion net outflows noted in the same period in 2019 brought about by uncertainties due, among others, to the ongoing impact of the COVID-19 pandemic to the global economy and financial system along with international and domestic developments such as geopolitical tensions, certain corporate governance issues and extended quarantine measures in select regions in the country.

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

Without such 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. INQ