‘Hot money’ pile in PH turns positive in May as stocks draw foreign buyers

Photo courtesy of Bangko Sentral ng Pilipinas Facebook Page

MANILA, Philippines—Short term investments in the country’s financial markets from overseas fund managers increased in May, bringing this year’s running total to a surplus and reversing the large deficit recorded around the same time in 2020.

According to the Bangko Sentral ng Pilipinas (BSP), registered foreign portfolio investments for May 2021 yielded net inflows of $417 million resulting from the $1.5 billion gross inflows and $1.0 billion gross outflows for the month. This was a reversal of net outflows of $374 million recorded in April 2021.

The $1.5 billion registered investments for May reflected a 124-percent increase compared to the $651 million recorded in April 2021.

At least 67.9 percent of investments registered were in Philippine Stock Exchange-listed securities, mainly in utility companies, property firms, banks, holding firms and food, beverage and tobacco companies. The remaining 32.1 percent went to investments in peso-denominated government securities.

The United Kingdom, Singapore, the United States, Luxembourg and Norway were the top five investor countries for the month, with combined share to total of 88 percent.

Gross outflows for the month of $1.04 billion were higher by 1.6 percent or by $17 million than the level recorded for April 2021 of $1.03 billion. The US was destination of 69.5 percent of total outflows.

Transactions for BSP-registered foreign portfolio investments from January to the first week of June 2021 yielded net inflows of $230 million.

This was lower than the $3.08 billion net outflows noted for the same period in 2020 amid the impact of the COVID-19 pandemic on the global economy and financial system.

According to the BSP, domestic developments in May included:

• 4.5 inflation in April 2021 which was consistent with projections
• Decline of 4.2 percent in GDP year-on-year in the first quarter of 2021
• BSP decision not to touch already low policy rates

Other economic developments during this period were:

• Government decision to place National Capital Region Plus on GCQ
• Rebalancing of closely-followed stock market indices overseas
• Decision of S&P Global Ratings to keep the Philippines’ BBB+ credit rating

Year-on-year, registered investments rose by 200 percent from the $486 million recorded in May 2020.

Gross outflows were lower than the outflows recorded a year ago of $1.5 billion or by 30.2 percent. Further, the $417 million net inflows were a major turnaround compared to the $1 billion net outflows recorded for the same period in 2020.

TSB