‘Hot money’ worth $345M left PH in Nov
Credit to Author: Mayvelin U. Caraballo, TMT| Date: Thu, 19 Dec 2019 16:54:32 +0000
FOREIGN portfolio investments returned to the negative territory in November, recording the biggest net outflows in three months, based on Bangko Sentral ng Pilipinas (BSP) data released on Thursday.
In a statement, the central bank said the month’s $345.26-million outflows, also called “hot money” — so called because of how easily these go in and out of the economy — reversed October’s $104.53-million net inflows.
The latest amount, it added, was the largest since the $391.74-million net outflows in August and was also a reversal from the year-earlier net inflows of $832.07 million.
The November outflows resulted from the $1.19-billion inflows and $1.54-billion outflows recorded in the month.
The BSP attributed the outflows to developments in the month. These include the stalled negotiations between the United States and China that could delay the first phase of the implementation of their trade deal; start of the public impeachment hearings on US President Donald Trump; the US Congress’ passage of a human rights bill supporting the pro-democracy protests in Hong Kong; and the rebalancing of the Morgan Stanley Capital International Philippines Index to reflect its new weightings.
The latest amount was 34.23-percent higher than the $1.14 billion registered in October, and 27.53-percent higher than the year-ago’s $1.20 billion.
The United States remained the main destination of the repatriated funds, accounting for 73.4 percent.
In a comment, Security Bank Assistant Vice President and economist Robert Dan Roces shared the Bangko Sentral’s view of US-China trade negotiations as a major factor for the reversal of hot money to negative territory.
“November saw the ping-pong dealings between the two countries in the run-up to [their] ‘phase one’ agreement; market sentiment whipsawed with every development, spooking investors, causing them to dump their positions in bonds and equities,” Roces said.
He, nevertheless, expect some reversal in these outflows “as the BSP provides forward guidance on monetary policy and some certainty from a phase one trade agreement.”
Meanwhile, November inflows declined by 4.52 percent from October’s $1.25 billion. Year-on-year, it was 41.39 percent lower than $2.04 billion.
The bulk or 86.4 percent of registered investments were placed on Philippine Stock Exchange-listed securities, which cover holding firms, banks, property companies, food, beverage and tobacco firms, and transportation services companies. The rest — 13.6 percent — were put in government securities.
Top foreign investors last month are the United States, Singapore, Hong Kong and Luxembourg. Their investments make up 78.6 percent of the total.
Year-to-date, foreign investment portfolios registered a net outflow of $1.57 billion, representing $15.48-billion inflows and $17.05-billion outflows.
Last year, hot money registered 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.