‘Hot money’ back to net outflow in Nov


FOREIGN portfolio investments registered a net outflow of $607.31 million in November on the outcome of the US elections and lower corporate earnings, the central bank said Thursday.

The net outflow last month was wider than the $68.79 million a year earlier, and a reversal from the $59.87 million in net inflow in October.

Outflows surged by 55.7 percent to $1.79 billion in November from $1.15 billion a year earlier and by 14.3 percent from $1.57 billion in October, Bangko Sentral ng Pilipinas (BSP) data showed.

The “lingering concerns about another interest rate adjustment in the US weighed down on investor sentiment,” the central bank noted in a statement.

Registered investments reached $1.79 billion, up 9.6 percent higher from $1.08 billion a year earlier. From October, inflows dropped 27.1 percent from $1.63 billion as investors reacted to “the unexpected result of the presidential election and the widely anticipated interest rate adjustment in the United States.”

The weak earnings among Philippine companies in the third quarter, was also cited as a factor that impacted on foreign portfolio investment.

11-month net inflow

However, cumulative foreign portfolio investments in the first 11 months of 2016 registered a net inflow of $672.73 million—a reversal from $473 million in net outflows in January to November last year.

“This was mainly due to: an initial public offering by an industrial company; large net inflows in shares of two holding companies and a universal bank; and renewed interest in peso government securities (GS),” the BSP said.

Most of the registered inflows in November, or 89.7 percent, went into shares traded on the Philippine Stock Exchange—particularly utilities companies, holding firms, property companies, banks, as well as food, beverage and tobacco firms.

The remaining 10.3 percent went into peso GS. Transactions in all types of investment instrument registered net outflows.

Accounting for 76.3 percent of the portfolio investments were the United Kingdom, the United States, Singapore, Malaysia, and Luxembourg.

The US was the main destination of outflows at 88.2 percent of the total fund transfers.

Foreign portfolio investments are considered hot money because of the ease with which the funds move in and out of a country and do not necessarily create jobs, unlike foreign direct investments that are used to build factories and buy capital equipment.

Hot money yielded a net outflow of $599.70 million last year, exceeding the central bank’s forecast of $200 million.


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1 Comment

  1. What else is new? When interest rates go up , hot money or carry trade parked in stock exchanges are pulled out and invested in higher yielding debt instruments …..