PH posts $335M net ‘hot money’ inflow in June

Helped cut 6-month net outflow to $106M from $3.3B a year ago

Inflows of short term portfolio investments to the Philippines surged year-on-year in June with local financial markets retaining a substantial amount of dollars after netting out asset repatriations, according to the latest data from the central bank.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said registered foreign portfolio investments for the sixth month of 2021 yielded net inflows of $335 million resulting from the $2.1 billion in gross inflows and $1.8 billion in gross outflows.

This is lower than the net inflows of $417 million recorded in May 2021, but compared favorably with the $235 million in net outflows in the same period last year at the height of the pandemic-induced economic slump.

Overall, transactions for these BSP-registered “hot money” flows for the first six months of the year yielded net outflows of $106 million— lower than the $3.3 billion in net outflows recorded for the same period last year.

The $2.1 billion registered investments for June 2021 reflected a 44.4-percent or $648 million increase from $1.5 billion in May 2021.

Bulk in stocks

About 91 percent of investments registered were in Philippine Stock Exchange-listed securities—investments mainly in food, beverage and tobacco companies, property firms, banks, holding firms and retail companies—while the remaining 9 percent went to peso-denominated government securities.

The United Kingdom, the United States, Singapore, Luxembourg and Norway were the top five investor countries for the month with a combined share to total of 74.2 percent.

Influences

The gross outflows for the month of $1.8 billion were higher by 70.1 percent or by $730 million than the $1 billion recorded for May 2021. The United States received 64.8 percent of total outflows.

According to the central bank, domestic developments during the month included investors’ reaction to the approval by the House of Representatives on the third and final reading of the Bayanihan to Arise as One Act, which aimed to provide financial aid to all Filipinos amid the COVID-19 pandemic; positive data on foreign direct investments in the country; the unemployment rate for April 2021 and the inflation rate for May 2021, which remained unchanged at 4.5 percent since March.

Also influencing fund movements during this period were the government’s decision to maintain quarantine restrictions in Metro Manila and some nearby provinces; the International Monetary Fund’s downgrading of the country’s growth outlook for this year; the BSP’s decision to maintain policy rates and progress in the nation’s inoculation program.

Year-on-year, registered investments rose by 106.6 percent from the $1 billion recorded in June 2020. Gross outflows were higher than the outflows recorded a year ago of $1.3 billion or by 41.2 percent.