MORE foreign portfolio investments — also known as “hot money” for the ease by which these funds enter and leave financial markets — came into the Philippines in November, according to data the Bangko Sentral ng Pilipinas released on Friday that bared a reversal from two straight months of net outflows.
November saw $832.07-million net inflows that were more than seven times the year-ago $107.71 million and which constituted a turnaround from net outflows of $67.83 million in October and $440.3 million in September.
November’s net inflows were also the biggest in eight months, or since March’s $1.132 billion.
Gross inflows increased by 80.78% to $2.041 billion last month from $1.129 billion a year ago, outpacing an 18% growth in total outflows to $1.208 billion from $1.021 billion in the same months. November’s total inflows were similarly the biggest since March’s $2.469 billion.
Year-to-date transactions yielded $925.95-million net inflows, turning around from the year-ago $634.53-million net outflows. Year-to-date net inflows exceeded the BSP’s $900-million projection for 2018.
Last year saw $205.03-million net outflows.
“This may be attributed to investors’ positive reaction to… decreasing global oil prices, BSP’s decision to raise its policy rate and progress on the rice tariffication bill — all of which are expected to temper inflation — as well as Chinese President Xi Jinping’s visit to the country, which was expected to further deepen ties with China in terms of diplomacy and business development,” the BSP said in a statement on November’s turnaround.
Sought for comment, Rizal Commercial Banking Corp. economist Michael L. Ricafort said: “The lower global oil prices that led to lower inflation helped in improving consumer spending and increase corporate profits, thereby leading to gains and more foreign portfolio investments in the local… financial markets.”
November saw headline inflation ease to six percent from September’s and October’s nine-year-high 6.7%, and the BSP’s Monetary Board firing off a 25-basis-point hike in benchmark policy rates as a “pre-emptive” move against any worsening in inflation expectations in the market. That brought the cumulative rate hike to 175 bp since May to 4.25-5.25%, as the benchmarks were maintained at prevailing levels last Dec. 13.
About 66.8% of November hot money inflows went to securities listed on the Philippine Stock Exchange (PSE) — mainly to food, beverage and tobacco companies, holding firms, property companies, banks and utilities companies — while the 33.2% balance went to peso-denominated government securities (GS). Transactions in peso GS and PSE-listed securities yielded net inflows of $510 million and $322 million, respectively.
The United Kingdom, Singapore, the United States, British Virgin Islands and Cayman Islands were the biggest sources of funds last month. — Karl A. N. Vidal