Hot money back to net outflow


Sept shows impact of US’ QE taper

The movement of portfolio investments to and from the Philippines reversed to a net outflow in September after five months of net inflows, reflecting the impact of the US tapering of its economic stimulus program, the central bank said.

bspForeign portfolio investments or “hot money” transactions in September showed a net outflow of $324.12 million, dropping sharply from the $682.73 million net inflow a year earlier, according to data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday.

On a monthly basis, the level of hot money transactions in September also reversed a  $483.45 million net inflow in August.

Gross outflows in the month reached $2.470 billion, compared with $1.919 billion a year earlier, while total inflows were recorded at $2.146 billion, versus the previous year’s $2.602 billion.

“Year-on-year, registered investments were lower by 17.5 percent due to the effects of the tapering of the quantitative easing program of the United States,” the central bank said.
The BSP noted that transactions in Philippine Stock Exchange and in peso-denominated government securities both recorded net outflows.

About 81.5 percent of the investments were Philippine Stock Exchange (PSE)-listed securities mainly telecommunications firms, holding firms, banks, property companies, and food, beverage and tobacco firms; while 18.5 percent went to peso-denominated government securities, the BSP data said.

“The United States, the United Kingdom, Singapore, Luxembourg, and Ireland were the top five investor countries for the month, with a combined share to total of 80.4 percent. The United States continued to be the main destination of outflows, receiving 77.5 percent of the total,” the BSP said.

Last year, foreign portfolio investments registered a net inflow of $4.2 billion, surpassing the revised $3.2-billion target of the BSP for 2013. For 2014, these registered investments are expected to decline to $1.5 billion, the net of $1.8 billion in projected inflows and $300 million in outflows.

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 central bank has forecast a narrower BOP surplus this year at $1.1 billion.


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