FOREIGN PORTFOLIO investments continued to leave the Philippines in October, although the net outflow that month was far less than a year ago and in September, the Bangko Sentral ng Pilipinas (BSP) said on Friday.
In a statement, the central bank said that these investments — called hot money for the ease by which they enter and leave markets –resulted in $67.84-million net outflows in October, 87.96% less than the $563.42-million net outflows in the same month last year.
October marked the second consecutive month of net outflows.
October’s net outflow was also 84.59% less than September’s $440.3 million.
“The deficit may be attributed to investors’ reaction to the country’s September inflation data coupled with the continuing trade tensions between the US and China,” the BSP said.
Prices of widely used goods that month climbed by a nine-year-high 6.7% in September, a pace sustained in October.
Gross investment inflows declined 30.97% to $952.60 million in October from $1.38 billion in the same month in 2017. But they were up 28.16% from September’s $743.31 million.
Outflows totalled some $1.02 billion in October, 47.69% lower from $1.95 billion in October 2017 and 13.56% less than September’s $1.18 million.
“The US continued to be the main destination of outflows, receiving 77.7% of total remittances,” the BSP said.
Top hot money sources for the month were the United Kingdom, United States, Singapore, Norway, and Luxembourg, accounting for 82.4% of the total pie, the BSP said.
About 68.8% of investments that month went to securities listed on the stock exchange — particularly to holding firms, food, beverage and tobacco firms, banks, property companies, and telecommunication companies — logging net outflows of $301 million.
The remaining 31.2% went to government securities and peso time deposits, which posted net inflows of $233 million and less than $1 million, respectively.
There were also net outflows from other peso debt instruments of less than $1 million.
“Year-to-date transactions (1 Jan to 2 November 2018) yielded net inflows of $94 million compared to the $812-million net outflows for the same period last year (2 January to 3 November 2017), which is attributed to a large investment in a holding company registered this year,” the BSP said.
The central bank expects hot money to record a $900-million net outflow by yearend. — E. J. C. Tubayan