‘Hot money’ continues to exit PHL

REUTERS

By Luz Wendy T. Noble, Reporter

MORE SHORT-TERM foreign investments left the Philippines in September, as investors remained wary amid the Delta-driven coronavirus surge.

Foreign portfolio investments — commonly referred to as “hot money” due to the ease by which these flows enter or leave an economy — posted a net outflow of $24.16 million in September, based on data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday.

This is 95% lower than the net outflow of $493.65 million a year earlier but a reversal from the $11.51 million in net inflow seen in August. It was also the smallest net outflow since the $21.58 million seen in March 2015.

For the nine-month period, hot money yielded a net outflow of $459 million, 89% lower than the $4.4 billion in net outflow logged in the same period in 2020.

Inflows in September doubled to $1.188 billion from $594.02 million a year earlier and was higher by 47% than the $806.99 million seen in August.

Meanwhile, gross outflows rose by 11.5% to $1.212 billion from the $1.087 billion in September 2020 and by 52% from the $795.48 million in the previous month.

Top five investors in September include the United Kingdom, United States, Switzerland, Hong Kong, and Singapore, which accounted for 84.4% of the investments.

Two-thirds of these funds went into securities listed on the Philippine Stock Exchange, including holding firms, property, telecommunication, food, beverage and tobacco, and utilities. The rest were channeled into peso government securities.

The hot money net outflow in September showed investor sentiment continued to be clouded by uncertainty caused by the pandemic, Asian Institute of Management economist John Paolo R. Rivera said.

“September was still volatile in terms of COVID-19 cases and economic conditions, inflation was surging, interest rate is still low — investor sentiment in September was still low,” Mr. Rivera said in a Viber message.

Meanwhile, international developments including more signals from the US Federal Reserve on its upcoming reduction in asset purchases as well as the debt crisis of China’s Evergrande Group were also areas of concern for investors, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Mr. Rivera is hopeful investor sentiment could improve in the coming months as the country sees a decline in COVID-19 infections.

“The story may change in October onwards as restrictions are relaxed, COVID-19 cases have been decreasing, the economy is more active than before given the new alert levels implemented which is more calibrated than the old system,” Mr. Rivera said.

For this year, the BSP expects hot money to yield a net outflow of $4.3 billion.

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