SHORT-TERM investments made by foreign investors to the Philippines yielded a net outflow in July, as withdrawals overwhelmed investments during the month.
The Bangko Sentral ng Pilipinas (BSP) reported on Thursday that foreign portfolio investments (FPI) to the country hit a net outflow of $340 million, resulting from the $1.1-billion gross outflows and $730-million gross inflows for the month.
July’s FPI number is a reversal of the previous month’s $334.5-million net inflow. It is, however, an improvement if compared to the $453-million net outflow in July of 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.
This type of foreign investment is usually a measure of the global economy’s investing sentiment toward the Philippines in short-term prospects for yields, in contrast to foreign direct investments (FDI) which are investments placed in the Philippines in search of long-term yield.
The BSP said investors reacted to domestic developments during the month, including the release of inflation data for the first half of the year, reports of vaccinations put on hold by some local government units due to supply constraints, the rising Covid-19 cases due to the more contagious Delta variant strain; and the announcement of the reimposition of enhanced community quarantine in Metro Manila.
Broken down, about 64.4 percent of investments registered were in listed securities mainly in property companies, holding firms, food, beverage and tobacco companies, banks and transportation services; while the remaining 35.6 percent went to investments in Peso government securities.
The United Kingdom, United States, Singapore, Norway and Luxembourg were the top 5 investor countries for the month with a combined share to total at 77.1 percent.
Despite the net outflows in July, the country is still performing better in terms of hot money flows compared to last year.
For the January-to-July period, net outflows reached a total $445.88 million. This is a significant improvement from the $3.76-billion net outflows in the same period last year.