Foreign portfolio investment that moved in and out of the
Philippines last year resulted in a net outflow of $310 million, reversing a $4.22-billion net inflow recorded in 2013, with investors seen scampering to take positions for better rates for their money in the US where a quantitative easing program was set to end.
Hot money outflows totaled $22.11 billion during the year, outpacing total inflows of $21.8 billion, data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday showed.
“The investment flows reflected investor reaction to the tapering of the quantitative easing program of the United States, which started in January 2014 and ended in October 2014,” the BSP explained in a statement.
The central bank was also quick to point out that the $21.8 billion aggregate registered investment for the year was the second highest level on its record since 1999.
The BSP traced the record level of investment to the country’s sound macroeconomic fundamentals; credit rating upgrades for the Philippines to a notch above the entry level for investments grade by Standard and Poor’s, Moody’s Investors Service, and the National Information and Credit Evaluation Ratings Inc.; and an improved full-year growth forecast for the local economy by Moody’s Analytics.
“There was also a strong and positive response to several market offferings during the year,” it said.
Outflow lower than 2013
The BSP also stressed that the total outflow of $22.11 billion was lower than the $24.18 billion recorded the preceding year, with the bulk of outflows seen in capital repatriation and remittance earnings.
About 75.4 percent of the incoming investment went into PSE-listed securities, while 23.7 percent was placed in peso-denominated government securities, according to the BSP data.
Transactions for PSE-listed securities yielded a net inflow of $1.3 billion, while other peso debt instruments for 2014 resulted in a net inflow of $47 million.
For peso government securities and peso time deposits, the reverse happened—with a net outflow of $1.5 billion for peso government securities and a net outflow of $145 million for time deposits.
“The United Kingdom, the United States, Singapore, Malaysia and Luxembourg were the top five investor countries during the year, with a combined share totaling 77.2 percent. The US continued to be the main destination of outflows, receiving 82.2 percent of the total,” the BSP added.
Foreign portfolio investments are one of the components of the country’s balance of payments (BOP), which summarizes the country’s economic transactions with the rest of the world over a certain period. The country incurred a $2.88 billion BOP deficit in 2014.