‘Hot money’ flows turn negative in February

After turning positive in January, foreign investors resumed the repatriation of their so-called “hot money” in the first two weeks of this month and bringing the six-week year-to-date level of net portfolio investments back in the red.

Documents from the Bangko Sentral ng Pilipinas showed that $59.95 million in cash were withdrawn by overseas fund managers from the local equity, bond and money markets in the first week of February 2018.

This was followed by a much faster pace of “hot money” repatriations in the second week of the same month with a net amount of $159.21 million leaving the Philippine financial system—for a total of $219.1 million in outflows.

These withdrawals reversed the portfolio investment level of $162 million in net inflows at the end of January to total net outflows of $57 million for the current year.

Inflows

In contrast, the first six weeks of 2017 yielded net portfolio inflows of $164.2 million, according to BSP data.

For the entire 2017, BSP said that $16.06 billion in “hot money” entered the local investment scene, offset by $16.27 billion in repatriations by fund managers, resulting in a net outflow of $205.03 million for last year, which, in turn, helped push the country’s overall balance of payments further into the red.

Just before the latest reversal in portfolio investment flows, BSP Governor Nestor Espenilla Jr. said the inward movement of hot money in January was “attributable to investor optimism over the passage of the first phase of the government’s tax reform program, positive news on corporate earnings and expected higher government spending for infrastructure projects.”

Top five investors

About 69.2 percent of investments registered in January were in Philippine Stock Exchange-listed securities pertaining mainly to holding firms, banks, property companies, food, beverage and tobacco firms, and utilities companies, while the remaining 30.8 percent went to peso-denominated government securities.

Transactions in PSE-listed securities and government securities yielded net inflows of $80 million and $82 million, respectively.

The United Kingdom, the US, Malaysia, Singapore and Hong Kong were the top five investor countries for the month, with a combined share to the total at 80.2 percent. The US continued to be the main destination of outflows, receiving 79.9 percent of the total.