‘Hot money’ worth $486M left PH in Jan
Credit to Author: Mayvelin U. Caraballo, TMT| Date: Thu, 20 Feb 2020 17:28:50 +0000
GEOPOLITICAL tensions and the coronavirus disease 2019 (Covid-2019) outbreak lead to net outflows of foreign portfolio investments reaching an eight-month high in January, the Bangko Sentral ng Pilipinas (BSP) said on Thursday.
In a statement, the BSP said last month’s $486.10-million net outflows of these investments, also called “hot money” — so called because of how easily these go in and out of the economy — was higher than the $320.96-million net outflows in December last year.
The latest amount, it added, was the largest since the $749.84 million in May and reversed the year-earlier net inflows of $762.82 million.
The January outflows resulted from the $1.23-billion inflows and $1.72-billion outflows recorded that month.
“Developments for the month included [the] continuing geopolitical tensions between the [United States] and Iran; ongoing trade negotiations between the US and China; renegotiation of the contracts of the country’s water concessionaires; and investor concerns on the spread of the novel coronavirus originating from Wuhan, China,” the BSP said.
IHS Markit Asia-Pacific chief economist Rajiv Biswas said January’s portfolio capital outflows likely reflected risk aversion as global investors became increasingly concerned about the economic impact of Covid-19 on China and the rest of Asia.
“Investors shifted toward safe haven assets and away from emerging markets equities and currencies, which likely also impacted…the Philippines capital markets,” he added.
Biswas noted, however, that “once the Covid-19 epidemic is brought under control, there should be some rebound in Asian asset classes, although there are still considerable uncertainties about when the epidemic will end.”
Outflows last month was 20-percent higher than the $1.43 billion registered in December and 32.5-percent higher than the year-ago’s $1.29 billion.
The US remained the main destination of the repatriated funds, accounting for 62.1 percent.
January inflows, meanwhile, increased by 10.9 percent from December’s $1.43 billion. Year-on-year, it was 40.1 percent lower than $2.06 billion.
The bulk, or 65.9 percent, of registered investments were placed in Philippine Stock
Exchange-listed securities, which cover property companies; holding firms; banks; food, beverage and tobacco firms; and telecommunication companies. The rest — 34.1 percent — were put in government securities.
Top foreign investors last month are the United Kingdom, the US, Singapore, Luxembourg and Hong Kong. Their investments make up 79 percent of the total.
Last year, net outflows of hot money hit $1.90 billion, an about-face from 2018’s $1.20-billion net inflow.
The 2019 tally compares with the Bangko Sentral’s forecast of $8-billion net inflows for the year.