Gains in local bourse tempered hot money outflows in July

Gains in the local stock market during the past several weeks helped trim down the net outflows of short-term foreign investments to $103 million in July after widening to $342 million in June.

The Bangko Sentral ng Pilipinas (BSP) said on Thursday transactions on foreign investments registered with the central bank recorded $784 million in gross outflows against $681 million in gross inflows.

The latest monthly result brought the cumulative amount of BSP-registered foreign investments in the first seven months of 2022 to net inflows of $625 million, a turnaround from net outflows of $446 million in the same period of 2021.

Last July, the volume of outbound capital shrank by 43 percent from the $1.4 billion recorded in June. It was also 27 percent lower than the $1.07 billion of gross outflows in July last year.

About two-thirds or 66 percent of foreign investments withdrawn from the Philippines in June went to the United States.

Meanwhile, inbound capital also shrank, by 34 percent from $1 billion recorded in June, and 7 percent lower than the $729.8 million of gross inflows in July last year.

Two-thirds in equities

Close to two-thirds or 65 percent of gross inflows in July were invested in Philippine Stock Exchange-listed securities issued by companies operating as holding firms and those engaged in food, beverage and tobacco; property; banks; and transportation services.

More than a third or 35 percent went lent to the government through investments in peso-denominated state securities.

In July, 85 percent of gross inflows came from the United Kingdom; the United States; Singapore; Hong Kong; and Luxembourg.

In sync with US

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the Philippine Stock Exchange index was recently at a two-and-a-half month high at more than 6,670 points.

Ricafort said this happened amid generally better corporate earnings and financial results, which could have been a bear market rally.

Also, he said the latest data was largely in line with US stock markets reaching new highs for the past three and a half to four months.