Hot money seen to end ‘18 with net outlfow of $100 million

The Bangko Sentral ng Pilipinas said it expects foreign portfolio investments or hot money to end with a $100-million net outflow in 2018, lower than the shortfall of $800 million in 2017.

The estimate under the bank’s latest round of economic data revisions was also lower than the projection of a net outflow of $900 million made in May.

Data showed that foreign portfolio investments more than doubled to $2 billion in November from $953 million in October, “fueled mainly by positive investors’ reaction to the decreasing global oil prices and the warming relations between the Philippines and China.”

The November figure resulted in a net inflow of $832 million for the month, an improvement from the $108 million net inflow a year ago.

About 66.8 percent of investments registered in November were parked in Philippine Stock Exchange-listed securities (pertaining mainly to food, beverage and tobacco companies holding firms, property companies, banks, and utility companies), while the 33.2-percent balance went to peso government securities.

Transactions in peso government securities and PSE-listed securities yielded net inflows of $510 million and $322 million, respectively.

The United Kingdom, Singapore, the United States, British Virgin Islands, and the Cayman Islands were the top five investor countries in November, with a combined share of 83.5 percent.

This brought the total transactions in the first 11 months to a net inflow of $926 million, an improvement from the $635-million net outflow in the same period last year.  The BSP attributed this to a large investment in a holding company registered this year.

Foreign portfolio investments are also called hot money because of the ease they are invested in and taken out of the local financial markets.

Registration of inward foreign investments with the Bangko Sentral is optional under the liberalized rules on foreign exchange transactions.  

The BSP expects hot money to register a net outflow of $200 million in 2019.

Topics: Bangko Sentral ng Pilipinas , Philippine Stock Exchange , foreign portfolio investments
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