Outflow of ‘hot money’ smaller in September than in 2020

MANILA, Philippines—More short term investments left than entered Philippine financial markets in September, reversing gains in August, but still representing a substantial improvement over net outflows in the same period in 2020 at the height of the pandemic.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said that portfolio funds registered with the agency yielded net outflows of $24 million in September, the sum of $1.21 billion gross outflows and $1.19 billion gross inflows for the period.

This was a reversal from the net inflows of $12 million recorded in August 2021. The outflow, however, was an improvement of 95 percent compared to the net outflows of $493.6 million in September 2020.

These funds refer to:

• Inward foreign investments in local stocks
• Peso-denominated government securities
• Peso time deposits with banks with minimum tenors of 90 days
• Other peso debt instruments
• Unit investment trust funds
• Other portfolio investments like exchange traded funds and Philippine depositary receipts.

The BSP said the $1.19 billion registered investments for September 2021 reflected a 47.3-percent or $381-million increase compared to the $807 million recorded in August 2021.

Philippine Stock Exchange-listed securities—investments mainly in holding firms, property, telecommunication, food, beverage and tobacco and utilities—were the destination of 74.3 percent of the hot money inflows, while the remaining 25.7 percent went to investments in peso-denominated government securities.

The United Kingdom, the United States, Switzerland, Hong Kong and Singapore were the top five investor countries for the month with combined share to total at 84.4 percent.

The BSP said the $1.21 billion gross outflows for the month were higher by 52.4 percent or $417 million than the $795 million recorded in August 2021. The US received 70.8 percent of total outflows.

Year-on-year, registered investments rose by 100.1 percent from the $594 million recorded in September 2020. Similarly, gross outflows were higher than the outflows of $1.1 billion recorded a year ago or by 11.5 percent.

Transactions for BSP-registered portfolio investments for the first nine months of 2021 yielded net outflows of US$459 million, which was lower than the $4.4 billion net outflows noted for the same period last year.

TSB