BSP registers $440-M net hot money outflows in September

By Lee Chipongian

The central bank registered $440 million worth of net outflows in foreign portfolio investments for the month of September, reversing August’s $226 million net inflows, as investors still worry about trade wars, the depreciating peso and high inflation.

A logo of the Bangko Sentral ng Pilipinas is seen at their headquarters in Manila, (REUTERS/Romeo Ranoco / MANILA BULLETIN) A logo of the Bangko Sentral ng Pilipinas is seen at their headquarters in Manila, (REUTERS/Romeo Ranoco / MANILA BULLETIN)

The September net outflows are also in contrast to same time last year’s net inflows amounting to $113 million.

The Bangko Sentral ng Pilipinas (BSP) said investors continue to worry on the following: trade tensions between the US and China, the weakening of the Philippine peso and the continued uptick in inflation which may have been aggravated by the effects of Typhoon Ompong. These concerns have affected their investment decisions in the past months.

For September, total outflows increased to $1.2 billion or 32.2 percent higher compared to the previous month’s $895 million and a mere 0.08 percent higher year-on-year. The BSP said the US “continued to be the main destination of outflows, receiving 73.7 percent of total remittances.”

Registered investments or inflows totalled $743 million during the month, down 33.7 percent from what was reported last August of $1.1 billion. It was also lower by 42.7 percent compared to September 2017 of $1.3 billion.

The BSP said about 85.7 percent of investments registered went into listed securities in the Philippine Stock Exchange. These funds were invested mainly in listed holding firms, banks, property companies, food, beverage and tobacco firms, and telecommunication companies. Another 14.3 percent of the funds were invested in peso government securities.

The BSP said net outflows were noted for all investment instruments. About $351 million withdrawals were traced from listed securities while another $89 million and $1 million were outflows from peso government securities and peso debt instruments, respectively.

The top five countries as the source for the hot money flows were the US, the United Kingdom, Singapore, Switzerland, and Malaysia. These countries accounted for 81.8 percent of total registrations in September.

The BSP expects foreign portfolio inflows to result in a net outflow of $900 million this year. In 2017, total net outflows amounted to $205 million which was a revised figure.