PH ‘hot money’ outflow hit $803.3M as of end-June

MANILA  -Short-term investments or “hot money” registered with the Bangko Sentral ng Pilipinas reversed to an outflow of $803.3 million as of the end of June this year from a net inflow of $778.3 million recorded for January to June 2022.

At the end of the first half, the Philippine economy was showing rapid recovery amid continued reopening. However, there was also marked volatility in both the domestic market and elsewhere, especially in the United States where monetary authorities were battling inflation that reached 40-year highs.

Even then, the monthly readout showed a turnaround to a net inflow of $1 million in June after four consecutive months of net outflows.

Though meager, net inflows in June contrasted with net outflows of $124 million in May and $342 million in June 2022.

For the month, gross inflows reached $889 million, 5.3 percent higher than $845 million recorded in May.

Meanwhile, $888 million went out of the country in June, a decrease of 8.4 percent from $969 million in gross outflows a month earlier.

Listed companies

About four-fifths of gross inflows in June was invested into companies that trade shares at the Philippine Stock Exchange, such as those that are engaged in property, banks, operating as holding firms, and in the businesses of food, beverage and tobacco; and telecommunications.

One-fifth was invested in peso-denominated government securities and other financial instruments.

Most of the inbound capital came from the United Kingdom, United States, Luxembourg, Singapore and Switzerland.

Meanwhile, two-thirds of the $888-million gross outflows went to the United States.

Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., said the improvement in net foreign portfolio investments last June may have to do with the easing inflation trend in the Philippines as well as in the United States.

Ricafort said that the pause in the policy rate hikes of both the US Federal Reserve and the Bangko Sentral ng Pilipinas in June may also have influenced the results.

He said that the anticipated further easing of inflation could support further improvement in the foreign portfolio investments data. INQ