Hot money plunges 60% during 'ghost month'

MANILA, Philippines - The net outflow of foreign portfolio investments, also called "hot money," plunged 60.4%, falling to less than US$1 billion, in August, which is considered a "ghost month" among investors.

Hot money fell to $999 million in August from the $2.5 billion in July.

In a statement on Friday, September 13, the Bangko Sentral ng Pilipinas (BSP) said that funds flowing into securities listed in the Philippine Stock Exchange (PSE) and peso-denominated government securities fell to $863 million and $136 million, respectively.

Outflows for the month declined to $1.4 billion from $1.6 billion in July. 

The BSP said foreign investors continued to pull back from emerging markets amid worries over the impending end of the US Federal Reserve’s stimulus program.

BSP also cited shorter trading days due to holidays and heavy flooding, as well as the "hesitancy to invest" during the “ghost” month of August, which is believed to be unlucky for business.

This brought the total inflows for the first 8 months lower than 20.4% from a year ago, largely due to sell-offs after the Fed's hinted it will unwind its multi-billion stimulus program.

Investment instruments

For PSE-listed securities, the BSP said the main beneficiaries were:

The following 5 countries accounted for a combined 76.4% of total hot money inflows:

About $1.1 billion or 77.6% of the total funds that flowed out went to the United States. -