FOREIGN portfolio investments swung to a net outflow last semester as June recorded the fourth straight month that more of such funds left the country, the Bangko Sentral ng Pilipinas (BSP) reported on Thursday.

These funds — also known as “hot money” for the ease by which they enter and leave the economy — saw a net outflow of $35.72 million last month, much less than the $516.12 million net outflows recorded in June 2018 as well as the $749.84 million that left the country last May, according to BSP data.

That brought the six-month tally to a $720.98-million net outflow, that reversed from the $322.87-million net inbound funds logged in 2018’s first half. Total outflows grew to $9.565 billion last semester from $8.314 billion a year ago, while total inflows edged up to $8.844 billion from $8.636 billion in the same comparative six-month periods.

The BSP projects $4 billion in how money net inflows for 2019.

Outflows totaled some $1.448 billion in June, a little more than the $1.427 billion that left a year ago although smaller than May’s $1.988-billion gross outflows. The United States got 69% of total outlfows.

That offset the $1.412 billion in foreign funds that entered the country in June that was nevertheless bigger than the year-ago $910.78-million gross inflows and May’s $1.238 billion. The United Kingdom, Malaysia, Singapore, the United States and Hong Kong were the top five investment sources, cumulatively accounting for 82.2% of total inflows last month.

About 73.6% of such investments went to securities listed on the Philippine Stock Exchange (PSE) — mainly in property companies, holding firms, banks, as well as food, beverage and tobacco companies — while the balance went to peso-denominated government securities.

Transactions in peso-denominated government securities yielded $104-million net inflows, while net outflows were noted for those involving PSE stocks ($139 million), as well as other peso-denominated debt instruments and other portfolio instruments (less than $1 million each).

The central bank attributed the month-on-month decline in net outflows to confidence inspired by the fourth straight month in May that overall inflation stayed within the central bank’s 2-4% target range after clocking in at successive multi-year highs last year, resumed US-China talks at the sidelines of the June 28-29 G20 meeting in Japan to settle their trade row and expected interest rate cuts of the US Federal Reserve.

Sought for comment, Rizal Commercial Banking Corp. economist Michael L. Ricafort said hot money flows improved in June after “sharp decline in the US/global bond yields amid more dovish signals” from the Fed that raised expectation of an interest rate cut to as early as its July meeting.

“No further escalations of tensions involving Iran also partly supported sentiment on the global and local financial markets,” Mr. Ricafort added. — Karl Angelo N. Vidal

RELATED ARTICLESMORE FROM AUTHOR