Foreign portfolio investments result in net inflows in October – BSP

MANILA, Philippines – Higher foreign portfolio investments or "hot money" were plowed into the Philippines in October, the Bangko Sentral ng Pilipinas (BSP) reported Friday, November 13.

Last month's record of foreign portfolio investments (also known as "hot money" since these are speculative capital flows that move very quickly in and out of markets) ended the 7 consecutive months of net outflows that started in March. The uncertainties are attributed to the interest rate lift-off in the US and the slowdown in China.
BSP said the Philippines booked a net inflow of foreign portfolio investments amounting to $27.84 million in October, versus a net outflow of $179.9 million in the same month last year.

"Hot money" transactions have been booking a net outflow for the past 7 months with $21.58 million in March; $31.14 million in April; $569.27 million in May; $521.99 million in June; $160.1 million in July; $542.54 million in August; and $323.98 million in September.

“Inflows were more into the government securities market. That would explain the net inflows in October,” BSP deputy governor Diwa Guinigundo said in a text message.

Data showed inflows reached $1.65 billion in October, 5.9% lower compared to $1.75 billion in the same month last year.

Outflows plunged 16.1% to $1.62 billion from $1.93 billion.

The central bank said 68.6% of investments registered in October were in securities listed in the Philippine Stock Exchange (PSE), primarily in property companies, holding firms, banks, food, beverage and tobacco firms, and telecommunication companies.
However, investments in PSE-listed securities resulted in net outflows of $140 million last month.

The central bank said 31.2% went to peso-denominated government securities while the rest of the investments were in other peso debt instruments.

Data showed transactions in peso-denominated government securities and other peso debt instruments yielded net inflows of $163 million and $5 million.
Top investors

The BSP added that the US, Singapore, the United Kingdom, Japan, and Belgium were the top 5 investor countries with combined share to total of 78.2%.
The US continued to be the main destination of outflows receiving 73.2%.
For the first 10 months of 2015, the BSP said foreign portfolio investments recorded a net outflow of $360.38 million. Inflows hit $17.6 billion while outflows reached $17.96 billion.

The BSP sees foreign portfolio investments hitting a net inflow of $1.4 billion this year from a net outflow of $310.21 million in 2014

“There are still a lot of uncertainties in the market. Hence, the target of a higher foreign portfolio investments could be a challenge,” Guinigundo said. –