August net outflows hit $58M as ghost month begins

MANILA, Philippines – The onset of ghost month coupled with rising tensions from North Korea's missile tests combined to see hot money leave the country in August.

The Bangko Sentral ng Pilipinas (BSP) said on Thursday, September 14, that foreign portfolio investments amounted to $936 million for August 2017.

The amount is down by 34.7% from July 2017 and 46.7% from August 2016, which the BSP attributed to a "hesitancy to invest" resulting in think trading due to the traditional ghost month period.

The lower investments, coupled with outflows of $994 million, resulted in net outflows of $58 million – a reversal from the $206 million net inflow seen in July 2017 and $427 million net inflow in August 2016.

Besides ghost month, the BSP also said "rising geopolitical tension between the US and North Korea, mixed Q2 corporate earnings, a reinvigorated anti-drug campaign of the administration, and alleged anomalies at the [Bureau of Customs]" all contributed to investor sentiment.

August's outflows, however, were lower by 19.1% and 25.3% compared to $1.2 billion and $1.3 billion recorded in July this year and in August of last year.

The BSP noted that about 84.9% of investments registered during the month were in Philippine Stock Exchange (PSE)-listed securities, mainly to banks, holding firms, food, beverage and tobacco companies, property firms, and transportation services companies. The remaining 15.1% went mainly to peso government securities (GS).

Transactions in PSE-listed securities yielded net inflows, while investments in peso GS and other peso debt instruments resulted in net outflows.

The United Kingdom, United States, Luxembourg, Malaysia, and Hong Kong were the main investor countries for the month, with a combined share to total of 77.7%. The US continued to be the main destination of outflows, receiving 79.9% of total remittances.

Foreign portfolio investments so far this year stand at a net outflow of $319 million compared to the same time last year, which saw a net inflow of $2 billion. –