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Philippines: Hot money outflow highest in 6 years
MANILA, Philippines — The Philippines suffered in May the biggest monthly net outflow of foreign portfolio investments in more than six years as investors continued to liquidate portfolios and keep money in cash due to heightened worries over the adverse economic impact of the coronavirus disease 2019 or COVID-19 pandemic, according to the Bangko Sentral ng Pilipinas.
Data released by the BSP showed that the net outflow of speculative funds or hot money amounted to $1.01 billion in May, 34.3 percent higher than the net outflow of $749.84 billion in the same month last year.
This was the biggest monthly net outflow since the $1.84 billion pulled out from the Philippines in January 2014. Foreign portfolio investments are also called hot or speculative money because of their flighty nature.
Gross inflows plunged by more than 60 percent to $486.26 million in May from $1.24 billion in the same month last year, the lowest recorded monthly gross inflow since November 2009.
The BSP said about 88.3 percent of investments registered were in listed securities in the Philippine Stock Exchange (PSE) and channeled in property developers, holding firms, banks, retail companies and telecommunication firms, while the remaining 11.8 percent went to investments in peso government securities.
The top five investor countries, which accounted for 88 percent of total inflows, are the United Kingdom, US, Singapore, Hong Kong and Luxembourg.
Likewise, gross outflows also declined by 25 percent to $1.49 billion in May from $1.99 billion a year ago.
Fund managers continued to skip the Philippines amid the general risk-off sentiment in the market that has prompted investors to fly to haven countries, the BSP said.
From January to May, the country booked a net outflow of foreign portfolio investments amounting to $3.07 billion, almost 4.5 times the $685.27 billion net outflow recorded in the same period last year.
“This is larger brought about by uncertainties due, among others, to the impact of the COVID-19 pandemic to the global economy and financial system, and other key events earlier in the year,” the BSP said.
The BSP said other key factors which affected investor sentiment in May include the continuing geopolitical tensions between the US and Iran, ongoing trade negotiations between the US and China as well as the renegotiation of the contracts of the country’s water concessionaires.
Gross inflows plunged by 37 percent to $4.68 billion from January to May compared to $7.43 billion in the same period last year, while gross outflows declined by 4.5 percent to $7.75 billion from $8.12 billion.
“Meanwhile, year-to-date transactions for all investments including PSE-listed securities, peso government securities, and other investments, resulted in net outflows,” the BSP said.
Source: https://www.philstar.com/business/2020/06/26/2023553/hot-money-outflow-highest-6-years