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Hot money outflows rise in June


By Lee Chipongian

The central bank registered a higher net foreign portfolio investment or hot money outflows in June of $516 million compared to the previous month’s $206 million, citing investors’ inflation and exchange rate concerns.

The June withrawal of funds contrasted with same time last year’s market sentiment which saw net inflows of $73 million.

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)

For the period, Bangko Sentral ng Pilipinas (BSP) data showed total inflows amounted to $911 million which was 24.9 percent lower than May’s $1.2 billion and also 54.8 percent lower than same time in 2017 of $2 billion.

According to the BSP, the decline “may be attributed to the US Federal Reserve’s decision to increase interest rates and investor concerns on inflation and the further weakening of the peso.” In June, inflation rose to a five-year high of 5.2 percent from 4.6 percent in May while the peso has averaged at P53.4 to the US dollar in the last 12 days.

The US, United Kingdom, Singapore, Hong Kong, and Switzerland are top investor countries with total combined of 82.5 percent.

About 92 percent of investments were placed in listed securities such as holding firms, property, banks, food, beverage and tobacco firms, and utilities companies while rest are in government securities. Net outflows of $346 million were however recorded in government securities, and $170 million in other debt instruments.

In terms of overall outflows, this amounted to $1.4 billion in June which was down by 26.6 percent from $1.9 billion last year. It was almost unchanged from May this year. The BSP said the numbers “closely reflected (May’s) level as investors reacted to the continuing trade war between the US and China coupled with sustained net foreign selling of PSE-listed securities since February of this year.” About 82.7 percent of outflows were traced to the US.

The BSP projects foreign portfolios to register a net outflow of $900 million at the end of this year, which was better than the $800 million net outflows in 2017.

The BSP is confident that despite a wider balance of payments shortfall for 2018, the BOP balance continue to be reliably supported by strong structural foreign exchange inflows.

The BOP and current account deficits are expected to climb to $1.5 billion and $3.1 billion, respectively, for 2018 from previous estimates of $1 billion and $700 million.

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