Hot money reverses to net outflow in Oct

FOREIGN portfolio investments turned negative in October with the month recording the biggest net outflow in nearly a year, Bangko Sentral ng Pilipinas (BSP) data released on Thursday showed.

The $563.42-million net “hot money” outflow was a reversal from September’s net inflow of $112.63 million. A year earlier, portfolio investments posted a net inflow of $59.87 million.

The October result was the largest net outflow since the $607.31 million posted in November 2016.

“Profit taking resulted in outflows for the month ($1.9 billion), which rose by 64.5 percent and 23.8 percent compared to the $1.2 billion and $1.6 billion for the previous month and a year ago, respectively,” the central bank said in a statement.

The United States remained the main destination of repatriated funds, accounting for 75.5 percent.

The BSP chose to highlight monthon-month growth in inflows, which at $1.38 billion were up 6.8 percent from September, and said that “this may be attributed to investor optimism arising from the anticipated approval of the tax reform program of the government”.

Compared to a year earlier, however, inflows were lower by 15 percent.

The bulk or 89.8 percent of October’s hot money was invested in Philippine Stock Exchange-listed securities, mainly in holding firms; property companies; mining; banks; and food, beverage and tobacco companies.

Peso government securities accounted 10.1 percent of the total while the 0.1 percent balance went to peso debt instruments and peso time deposits.

The United States, United Kingdom, Norway, British Virgin Islands and Luxembourg, were the top five investor countries with a combined 81 percent of the total.

Taking preliminary results for the first three days of Nobember into account, yearto-date hot money flows were negative with a net outflow of $812.17 million, a reversal from the $1.4-billion net inflow recorded year earlier.

The BSP traced this to “certain domestic and International developments (including the interest rate hikes by the US Federal Reserve, global terrorist attacks, North Korea’s nuclear missile testing and the closure order for several mining companies in the country).”