Net ‘hot money’ outflow hit $64.25M in Jan-Aug

FOREIGN money was pulled out of Philippine stocks and bonds for the sixth consecutive month in August amid continued turmoil in financial markets, government data showed.

The tally at the end of August showed more money has flowed out of the country’s financial markets than the cash that came in, despite strong inflows at the start of the year.

Last month’s outflows came amid the most recent episode of volatility in Asian markets. In late August, Beijing allowed its currency to depreciate against the dollar to help revive China’s flagging export sector. Market turmoil also comes amid uncertainty over the US Federal Reserve’s possible rate hike this year.

Net outflows of foreign investments in local stocks, bonds and deposit certificates reached $524 million in August, rising from the previous month’s $160 million, data from the Bangko Sentral ng Pilipinas (BSP) showed. Net outflows mean more money went out of the country.

Levels of foreign portfolio investments, referred to as “hot money” for the speed at which they enter and exit markets, are used as an indicator for the perceived health of an economy.

The $1.8 billion in net inflows built up in January and February was completely wiped out as of the end of August. Outflows for the month brought the country’s year-to-date position to net outflows of $64.25 million.

The United States, United Kingdom, Singapore, Luxembourg and Hong Kong were the top five investor countries for the month, with combined share to total of 82.3 percent. The US continued to be the main destination of outflows, receiving 81.4 percent of the total.

About 88.7 percent of investments registered in August were in publiclylisted securities. The money went to holding firms, banks, telcos, and food and beverage makers.

The BSP said about 10.8 percent of foreign investments went to peso-denominated government securities, while the remaining 0.5 percent of investments were used for time deposits.