Net ‘hot money’ reverts to outflow
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Wed, 17 Apr 2019 16:15:33 +0000
FOREIGN portfolio investments returned to negative territory in March, recording the biggest net outflow in more than two years based on Bangko Sentral ng Pilipinas (BSP) data released on Wednesday.
The $739-million net “hot money” outflow was a reversal of February’s $339.57-million net inflow. It was the largest since a $807.15-million net outflow in September 2016 and was also a reversal from the year-earlier net inflow of $1.132. billion.
This came as large outflows from government securities offset investments in Philippine Stock Exchange (PSE)-listed issues.
Registered foreign portfolio investments amounted to $1.732 billion for the month, higher than the $1.410 billion in February but down 29.8 percent from March last year.
The bulk or 66.5 percent was invested in PSE-listed securities — mainly holding firms; food, beverage and tobacco companies; property developers; banks; and transportation services companies — while the rest went to peso government securities (GS) and unit investment trust funds.
The United Kingdom, the United States, Singapore, Luxembourg and Hong Kong were the top five investor countries with a combined 80.3 percent of the total.
March’s outflows of $2.471 billion, meanwhile, reflected increases of 130 percent and 84.9 percent, respectively, compared to the previous month ($1.070 billion) and a year ago ($1.336 billion).
“This may be attributed to large outflows from peso GS amounting to $939 million for March 2019 vis-à-vis the $154 million recorded in February,” the BSP said.
The United States remained the main destination of repatriated funds, accounting for 76.8 percent.
Year-to-date hot money flows were positive at a net inflow of $3.363 million, lower than the P766.05 million a year ago.
Hot money is mostly invested in the stock market and does not necessarily create jobs, unlike foreign direct investments that are used to build factories and buy capital equipment.
Speculative funds invested in financial assets are a component of the Philippines’ balance of payments, which summarizes the country’s economic transactions with the rest of the world over a certain period.
The Bangko Sentral expects this type of investment to post a net outflow of about $200 million this year.
Last year, hot money hit a net inflow of $1.204 billion, the highest in five years and an about-face from 2017’s $195.40-million net outflow.
The 2018 tally was also better than the BSP’s forecast of a $100-million net outflow and was the largest net inflow since 2013’s $4.225 billion.
The post Net ‘hot money’ reverts to outflow appeared first on The Manila Times Online.