For­eign port­fo­lio in­vest­ments yield net out­flow

Business World - - Banking & Finance - By Melissa Luz T. Lopez Se­nior Re­porter

MORE FOR­EIGN CAP­I­TAL ex­ited the Philip­pines in Septem­ber, marked by sus­tained net for­eign sell­ing of lo­cal stocks amid con­cerns on surg­ing con­sumer prices and a weaker peso, the cen­tral bank said yes­ter­day.

For­eign port­fo­lio in­vest­ments posted a $440.3-mil­lion net out­flow last month, re­vers­ing the $225.85 mil­lion net in­flow in Au­gust as well as the $112.63 mil­lion in fresh cap­i­tal which en­tered the coun­try in Septem­ber 2017.

These flighty in­vest­ments are of­ten called “hot money,” as such funds en­ter and leave the coun­try with ease.

Septem­ber’s tally is the big­gest net with­drawal since the $516.12 mil­lion out­flow recorded in June. In­vestor ap­petite turned sour last month amid con­cerns on lo­cal and global is­sues.

In a state­ment, the Bangko Sentral ng Pilip­inas (BSP) said mar­ket play­ers are cau­tious about the trend weak­ness of the peso, which has de­pre­ci­ated by over eight per­cent year-to-date against the dol­lar, as well as the “con­tin­ued uptick” in in­fla­tion likely ag­gra­vated by the ef­fects of typhoon Om­pong (international name: Mangkhut).

Prices of widely-used goods rose by 6.7% last month, a fresh nine-year high

amid surg­ing costs of food; trans­port; and hous­ing, util­i­ties and fuel, the Philip­pine Sta­tis­tics Au­thor­ity said. This brought the nine-month in­fla­tion tally to five per­cent, well above the BSP’s 2-4% tar­get range.

The BSP raised in­ter­est rates by an­other 50 ba­sis points dur­ing their Sept. 27 pol­icy meeting to rein in in­fla­tion ex­pec­ta­tions and tem­per ex­ces­sive ex­change rate swings.

Wors­en­ing trade ten­sions be­tween the United States and China also kept for­eign in­vestors wary about plac­ing their money in the Philip­pines, the cen­tral bank said.

For­eign firms in­vested $743.31 mil­lion in the Philip­pines in Septem­ber, a third lower than the $1.121 bil­lion in­fused the pre­vi­ous month.

These in­vest­ments were can­celled out by $1.184 bil­lion in out­bound cap­i­tal, also a third higher than the $895.31 mil­lion with­drawals in Au­gust and is the big­gest seen in three months.

Bulk of the hot money place­ments were in­vested in listed firms at the Philip­pine Stock Ex­change, par­tic­u­larly into hold­ing firms; banks; prop­erty com­pa­nies; food, bev­er­age and to­bacco firms; and telecom­mu­ni­ca­tion com­pa­nies. This led to a $351 mil­lion net out­flow, which came at a time of sus­tained net for­eign sell­ing at the lo­cal bourse.

Around 14.3% of the in­vest­ments went into peso debt pa­pers, which also re­sulted to an $89-mil­lion out­flow.

By source, the big­gest sources of cap­i­tal are in­vestors in the United King­dom, the US, Sin­ga­pore, Switzer­land and Malaysia.

De­spite Septem­ber’s slump, hot money net­ted a $161.71 mil­lion net in­flow for the first nine months. The BSP ex­pects for­eign port­fo­lio in­vest­ments to net a $900-mil­lion out­flow by yearend, which would be wider than the $205.03 bil­lion in with­drawn cap­i­tal last year.

HOT MONEY flew out of the coun­try in Septem­ber amid lo­cal and for­eign is­sues.

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