February sees net outflow of ‘hot money’

Foreign portfolio investments registered a net outflow in February, as the improving economic climate offshore and declining domestic interest rates prompted fund owners to bring their money out of the Philippines.

Net outflow during the month was recorded at $305 million, a reversal from the inflow of $534 million in the same month last year.

“There were heavy selloffs in PSE-listed securities, primarily due to profit-taking. Large outflows from peso-denominated government securities were also noted due to a fall in government bond yields,” the Bangko Sentral ng Pilipinas reported Thursday.

The BSP said there was actually an increase of 1 percent in the gross inflow of foreign “hot money” in February to $1.49 billion, from the $1.47 billion registered in the same month last year. But outflow almost doubled to $1.8 billion from $935 million.

For the first two months of the year, however, there was a net inflow of foreign portfolio investments at $280.7 million, down 61 percent from the net inflow of $727 million in the same period last year.

Monetary officials said that amid an improving economic climate offshore, some portfolio fund owners went back to investing in dollar-denominated instruments, such as US Treasuries, and dumped assets from emerging markets like the Philippines.

The fact that interest rates in the Philippines were at record lows did not help as far as attracting foreign portfolio funds was concerned, market players observed.

Meantime, the BSP reported that foreign portfolio inflow into the Philippines in February came mostly from investors based in the United Kingdom, the United States, Singapore, Hong Kong and Luxembourg.

The inflows were mainly placed in stocks listed on the Philippine Stock Exchange (PSE) and governments securities, the BSP said.