Hot money back to outflows in September


SHORT-TERM investments made by foreign investors to the Philippines slumped back to the net outflow territory in September due to higher withdrawals of investments from the country during the month, the Bangko Sentral ng Pilipinas (BSP) reported on Thursday.

The BSP said the total gross outflows of foreign portfolio investments (FPI), which hit $1.2 billion in September, more than offset the $1.19-billion gross inflows for the month.

This resulted in the net outflow of $24.16 million, reversing the $11.5-million net inflow in the previous month. Compared to last year’s level, however, the September 2021 net outflow is an improvement from the $493.6-million net outflow in September 2020.

FPI are known as “hot” or “speculative” money because they are easily pulled in and out of the local platforms in the slight change of global and local sentiment.

Majority of the investment—or 74.3 percent—during the month were in listed securities in holding firms, property, telecommunication, food, beverage and tobacco and utilities.

Meanwhile, the remaining 25.7 percent went to investments in Peso government securities.

The United Kingdom, United States (US), Switzerland, Hong Kong and Singapore were the top 5 investor countries for the month with a combined share to total of 84.4 percent.

The US, meanwhile. received 70.8 percent of total outflows.

The September development in the country’s hot money pushed its nine-month performance to a net outflow of $493.13 million. While this is a bigger year-to-date net outflow compared to last month, it is still an improvement from the $4.5-billion net outflow seen in the first nine months of 2020.

Earlier this week, a BSP study showed the Philippines ranked the poorest in majority of the indicators that foreign direct investors use in choosing which country to put their capital in.

These foreign direct investments (FDI) are the long-term counterpart of FPI or hot money.

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