$607M worth of hot money flows out of PH in November

MANILA, Philippines –  After a positive turn in October, foreign portfolio investments or “hot money” fell again sharply in November, according to the Bangko Sentral ng Pilipinas (BSP).

Preliminary data released by the BSP on December 15 showed that foreign portfolio investments hit overall net outflows $607 million, a reversal from the $60 million net inflows recorded in the preceding month. The figure was also much higher than last year’s net outflows of $69 million.

Data also showed that registered investments for the month amounted to $1.2 billion, a 27% decline from the $1.6 billion recorded in October. 

The central bank attributed the drop mainly to the expectation of a rate hike by the US Federal Reserve as well as lingering effects of Donald Trump’s shock election victory and weak Q3 earnings by local corporations.

After months of speculation, the US Federal Reserve finally raised key interest rates to a range of 0.5 to 0.75% earlier this week. To go along with its first rate hike of this year, Fed officials also projected 3 more increases for 2017. (READ: How a Fed rate hike impacts the Philippine economy)

Outflows for October also rose by 14.3% from October’s $1.6 billion as lingering concerns on the rate hike weighed down on investor sentiment the BSP noted.

Year on year, outflows rose by $1.8 billion or by 55.7% from the $1.2 billion that exited the country in November 2015.

2016 still positive

Despite the November drop, the BSP pointed out that year-to-date figures still yielded an overall net inflow of $673 million in contrast to net outflows of $473 million for the same period last year.

The BSP attributed this to a large public offering by an industrial company, large inflows into two holdings companies and a commercial bank and strong interest in peso government securities (GS).

BSP data showed that about 89.7% of investments registered in November were in PSE-listed securities with the remaining 10.3% of investments made in Peso GS.

The United Kingdom, US, Singapore, Malaysia, and Luxembourg were the top 5 investor countries for the month, with combined share to total of 76.3%, while the US continued to be the main destination of outflows, receiving 82.2% of total remittances. ­– Rappler.com