Hot money outflows total $374M in April

The central bank said it registered $373.95 million of net foreign portfolio investment outflows in April compared to the bigger withdrawal of $540.97 million in March. 

On a year-on-year basis, speculative funds or “hot money” net outflows is also lower compared to the $660.38 million net outflows recorded in 2020. 

“Developments (in April) included investor reaction to easing inflation, contraction of the country’s gross domestic product in 2020, extension of local quarantine measures, progress of the government’s vaccination program and the continued rise of infections in the country,” the Bangko Sentral ng Pilipinas (BSP) noted in a statement. 

For the first four months of 2021, total registered hot money is a net outflow of $857.44 million. “This is lower compared to the $2.1 billion net outflows noted for the same period last year (January to April 2020) amid the ongoing impact of the COVID-19 pandemic to the global economy and financial system,” said the BSP. “This has been accompanied by international and domestic developments such as the new US administration, vaccine rollout and the reimposition of additional quarantine measures amid the surge in virus infection.”  

Hot moneys are inward foreign investments such as those placed in Philippine Stock Exchange listed securities, peso-denominated government securities, peso time deposits with banks with minimum tenor of 90 days, and other peso debt instruments. It also includes unit investment trust funds, and other portfolio investments such as Exchange Traded Funds and Philippine Depositary Receipts. It is optional to register hot moneys with the BSP and if registered, investors are allowed to buy foreign

exchange from local banks and remit capital and earnings. 

 The BSP said the year-to-date transactions for investments in listed securities and other investment instruments resulted in net outflows. As for peso-denominated government securities, this yielded net inflows during the period.

 For the month of April, the BSP registered total gross outflows of $1.02 billion versus gross inflows of $651.16 million, both lower compared to same time last year of $1.28 billion and $627.02 million.

 End-April hot money flows in terms of gross outflows of $4.62 billion and $3.76 billion for gross inflows is also lower compared to same period in 2020 of $6.26 billion and $4.19 billion.

 The BSP said about 68.9 percent of investments registered were in PSE-listed securities and these are invested in property companies, banks, holding firms, food, beverage and tobacco companies and transportation services firms. About 31.1 percent are in peso-denominated government securities.

 The top five investor countries are United Kingdom, US, Luxembourg, Singapore and Norway. These countries contributed 84.7 percent of the total registered hot moneys.

 For this year, the BSP is projecting hot money inflows to reach $5.7 billion.