Outflows in October diluted ‘hot money’ absorbed by PH stocks

For the second month in a row, more short-term investments moved out of the Philippines, trumping inflows, as investors saw better opportunities elsewhere, particularly the United States.

The Bangko Sentral ng Pilipinas (BSP) said in a statement there was a surge in the net outflow of portfolio funds, which was pegged at $221 million in October 2021.

This was more than nine times as much as the net outflow of $24 million in the previous month. This also reversed the net inflow of $439 million recorded for October 2020.

Last month, a total of $1.17 billion in portfolio funds flowed out of the Philippine market while a total of $950 million flowed in.

For the 10 months up to the end of October, there was a net outflow of $680 million, about a fifth of the $3.9-billion outflow in the same period of 2020.

Under the rules on foreign exchange transactions, registration of inward foreign investments with the BSP is optional.

Such registration is a must only if the investor or its representative will purchase foreign exchange—from authorized agent banks and/or their subsidiary/affiliate foreign exchange corporations—for repatriation of capital and remittance of earnings that accrue on the registered investment.

Repatriation of capital and remittance of earnings on its investment may still be done even if the investment is not registered with the BSP, but the foreign exchange will have to be sourced outside the banking system.

At $950 million, the amount of BSP-registered inflows in October showed a 20-percent decrease from the $1.2 billion recorded in September.

The BSP said 96 percent of these investments were in Philippine Stock Exchange-listed securities, mainly in food, beverage and tobacco, property, banks, holding firms and information technology. The remainder went to peso-denominated government securities.

The top five sources of inbound investments, accounting for an aggregate 71 percent of total inflows, were the United Kingdom, the United States, Hong Kong, Luxembourg and Switzerland.

As for outflows, the October volume was 3.5 percent lower compared to September’s $1.21 billion.

“The US received 69 percent of total outflows (in October),” the BSP said.

­—Ronnel W. Domingo