MORE FOREIGN CAPITAL left the country than what entered in November, as investors continued to worry about tensions plaguing major economies.

Foreign portfolio investments — also called “hot money” due to the ease by which these funds enter and leave the economy — logged a net outflow of $345.26 million in November, according to data from the Bangko Sentral ng Pilipinas (BSP).

Meanwhile, the month’s total was a reversal from the net inflow of $104.53 million seen the preceding month.

This brought the January to November period’s total to a net outflow of $1.57 billion, a turnaround from the $925.95-million net inflow logged a year ago.

Gross outflows in November stood at $1.541 billion, higher than the $1.208 billion booked a year ago.

Meanwhile, gross inflows were lower at $1.195 billion from last year’s $2.04 billion.

The BSP said the largest chunk (86.4%) of hot money flows went into securities listed in the Philippine Stock Exchange, which were mainly channeled into holding firms, banks, property companies, retail companies, as well as food, beverage, tobacco firms, and transport service companies.

“The United Kingdom, the United States, Singapore, Hong Kong, and Luxembourg were the top five investor countries for the month, with combined share to total at 78.6%,” the BSP said in a statement.

According to the central bank, November saw relevant developments such as the “stalled negotiations between the stalled negotiations between the US and China which could delay the first phase of the implementation of their trade deal and the start of the public impeachment hearings on US President Donald Trump.”

Likewise, the BSP noted that last month saw the passage of a human rights bill in the US Congress as well as the “rebalancing of the Morgan Stanley Capital International Philippines Index to reflect its new weightings.”

Economists blamed the hot money outflows mainly on continued tensions between the world’s two biggest economies caught in a 17-month long trade siege.

“Portfolio flows in November 2018 were positive, in stark contrast to the net outflow in November 2019 with both developments linked to the US-China trade war,” ING Bank-NV Manila Senior Economist Nicholas Antonio T. Mapa said, adding that the progress of the impeachment proceedings against US President Donald J. Trump and the political unrest in Hong Kong also added to the risk-off tone.

The phase one deal which was recently in the spotlight may have caused some uncertainties to die but this does not mean that the trade war has come to an end, according to UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion.

“Obviously, a lot of the emerging markets have been impacted and may have to adjust carefully to navigate through the new normal of the global economy,” he explained.

This trade deal paired with leads from the local central bank will bring in some relief for hot money flows, according to Security Bank Corp. Chief Economist Robert Dan J. Roces.

“We expect some reversal in these outflows as the BSP provides forward guidance on monetary policy and some certainty from a phase one trade agreement,” he said in an e-mail.

“Improved communication from the BSP through forward guidance has also gone a long way in attracting portfolio flows and we can expect full-year 2019 to see a net inflow to help keep the BoP in surplus,” ING’s Mr. Mapa added. — Luz Wendy T. Noble