Fund outflows reach $1 billion in May

Net hot money outflows amounted to $1 billion in May, higher than the previous month’s $660 million, the Bangko Sentral ng Pilipinas (BSP) said.

The total withdrawals for these foreign portfolio investments from January to May totaled $3.1 billion, significantly more than same time last year of $685-million net outflows.

The virus outbreak and its “uncertainties” was a main factor for the net outflows during the period.

The BSP also noted that it is not only the COVID-19 pandemic that affected the global economy and financial system, but also the “continuing geopolitical tensions between the US and Iran and ongoing trade negotiations between the US and China.” On the domestic front, investors were also affected by the renegotiation of the contracts of the country’s water concessionaires, Maynilad and Manila Water.

For the first five months of 2020, gross outflows totaled $7.8 billion while gross inflows was at $4.7 billion.

For the month of May only, gross outflows reached $1.5 billion while gross inflows totaled $486 million.

The $486-million registered investments in May, said the BSP, “reflected a 22.4 percent decline from the $627 million figure in April 2020 and is also the lowest recorded monthly gross inflows since November 2009.”

About 88.3 percent of fund inflows were invested in listed companies, especially in sectors such as property, banks, holding firms, retail and telecommunication. Another 11.8 percent were placed in peso government securities.

“The United Kingdom, the US, Singapore, Hong Kong and Luxembourg were the top five investor countries for the month, with combined share to total at 88.1 percent,” said the BSP.

In the meantime, the US has 47.5 percent of total outflows. For May, the total outflows of $1.5 billion were higher than April’s $1.3 billion.

The BSP recently revised both its hot money and foreign direct investments projections for 2020.

Foreign portfolio investments are expected to register modest inflows of $2.4 billion for this year compared to previous forecast (November 2019) of $8.2 billion.

Last year, hot money amounted to $5.6-billion net inflows.