$544M of hot money flows out of PH in first 5 months of 2017

MANILA, Philippines – In the first 5 months of the year, a net total of $543.79 million in foreign portfolio investments flowed out of the economy, according to data by the Bangko Sentral ng Pilipinas (BSP).

This is in stark contrast to the $178 million in net inflows for the January-May period last year.

The BSP attributed this year’s result mainly to the lack of inflows.

"While outflows were relatively steady, there was a substantial drop in inflows which may be attributed to continued uncertainties arising from domestic and international developments," the central bank said in a statement last Thursday, June 15.

These developments included "the United States air strike against Syria, global terrorist attacks, the interest rate increase by the US Federal Reserve in March 2017, and the closure order for several mining companies in the Philippines," it added.

Beyond these, clashes in Marawi City also erupted on May 23, resulting in the declaration of martial law in Mindanao.

Total inflows for the 5-month period stood at $6.380 billion compared to $7.113 billion in inflows amassed during the same time last year.

Total outflows for the period, meanwhile, hit $6.924 billion compared to the $6.935 billion recorded for the same time last year.

Foreign portfolio investments are often referred to as hot money because these can enter and leave a market very easily, in contrast to the longer-term foreign direct investments.

OUTFLOWS. A total of $6,380.59 billion in inflows is recorded versus $6,924.37 billion in outflows, resulting in net outflows of $543.79 million so far in 2017.

May portfolio investments

For the month of May alone, net outflows amounted to $24.35 million, a reversal from the net inflows of $51 million in April and the $73 million seen in May last year.

Total registered investments for May stood at $1.5 billion, reflecting a 12.5% increase from the $1.3 billion recorded in April.

Year-on-year, however, inflows declined by 16.8% from $1.8 billion a year ago.

The bulk or 79.1% of the investments registered were Philippine Stock Exchange (PSE) listed securities, which went mainly to holding firms; property companies; banks; food, beverage, and tobacco firms; and utilities.

Another 18.4% went to peso government securities while the remaining 2.5% went to other peso debt instruments.

Transactions in PSE-listed securities and other peso debt instruments yielded net inflows of $103 million and $35 million, respectively, while investments in peso GS resulted in net outflows of $163 million.

The United Kingdom, the United States, Singapore, Malaysia, and Luxembourg were the top 5 investor countries for May, with a combined share of 76.9%.

Meanwhile, the US continued to be the main destination of outflows, receiving 79.2% of total remittances. – Rappler.com

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