MORE foreign funds left the Philippines in February compared to a year ago, reversing from January’s net inflows, in the face of uncertainties in the global market, the Bangko Sentral ng Pilipinas (BSP) reported on Thursday.
Foreign portfolio investments posted a $545.14-million net outflow last month, bigger than the $409.01 million that left the country in February 2017 and reversing from January’s $162.16-million net inflow, the central bank said in a statement.
These funds are also called “hot money” since they enter and leave the country with ease at any news that affects investor sentiment.
February ended three straight months of net inflows.
The central bank attributed February’s bigger outflows “to profit taking as well as investor reaction to news of possible rate increases by the US Federal Reserve due to an expected surge in inflation amid implementation of the US government’s tax cuts.”
Then newly seated Fed Chairman Jerome H. Powell had hinted in remarks to US lawmakers that the central bank will stick to its path of gradual rate increases.
Foreign investors put in $1.029 billion in February, 4.8% more than the year-ago P981.2 million but 36.64% less than January’s $1.623 billion.
At the same time, February saw bigger outflows of $1.574 billion, 13.2% more than the year-ago $1.390 billion and 7.7% more than January’s $1.461 billion.
Around 81% of placements went to companies listed on the Philippine Stock Exchange, mostly to holding companies; property firms; banks; food, beverage and tobacco firms; as well as casino and gaming companies.
The remainder went to government-issued peso-denominated debt notes, the BSP said.
Year-to-date, hot money settled at $795.16-million net inflow, turning around from the $168.41-million net outflow recorded in 2017’s first two months.
Investors had been generally bullish as the year opened, with optimism fueled by the implementation of Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion Act that is the first of up to five planned overhauls of the country’s taxation system in order to make it fairer and yield more collections.
Additional taxes imposed starting Jan. 1 are expected to offset foregone revenues from personal income tax cuts and generate P82.3 billion for 2018. This, in turn, will help fund the P1.1-trillion infrastructure budget programmed for the entire year.
Investors from the United Kingdom, the United States, Malaysia, Hong Kong, Luxembourg and Singapore were the biggest sources of hot money last month.
About 73.8% of funds that left the Philippines went back to the US.
The BSP expects $900 million in net outflows this year, more than four times the $205.03 million that actually left the country in 2017. — Melissa Luz T. Lopez