• Hot money flows out in Nov

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    November saw a net outflow in foreign portfolio investments on the back of low corporate earnings, concerns over a US interest rate hike and trading holidays, the central bank reported on Thursday.

    The net outflow of $68.79 million was a reversal from net inflows of $27.84 million in October and $369.92 million a year earlier, the Bangko Sentral ng Pilipinas (BSP) said.
    Total inflows increased to $1.09 billion from October’s $1.65 billion but were down from the $1.79 billion recorded a year earlier.

    The central bank attributed the lower portfolio investments to “weak third-quarter corporate earnings reports; renewed concerns on the prospects of interest rate hike in the US by December 2015; and the thin volume of transactions brought about by trading holidays.”

    Total outflows fell to $1.15 billion from $1.62 billion a month earlier and November 2014’s $1.42 billion.

    Most of the registered inflows went to the stock market. With a 78.1 percent share, the funds were used to purchase shares in property companies, holding firms, banks, food/beverage/tobacco firms and telcos. Another 21.5 percent went to peso government securities (GS) and 0.4 percent was invested in other peso debt instruments (OPDIs).

    While PSE-listed securities accounted for the bulk of inflows, November still saw this segment recording a net outflow of $89 million. Peso GS and OPDIs yielded a net inflow of $16 million and $4 million, respectively.

    The United Kingdom, United States, Singapore, Luxembourg and Belgium were the top five investor countries for the month with a combined share of 82.8 percent.

    The US remained the main destination of outflows, receiving 80.6 percent of the total.
    Year to date, foreign portfolio investments yielded a net outflow of $429.18 million, narrower than the $707.22 million recorded a year earlier.

    Total outflows of $19.12 billion offset total inflows of $118.69 billion, the central bank reported.

    Called hot money because of the ease with which the funds enter and leave the country, foreign portfolio investments are invested in Philippine financial assets and do not necessarily create jobs, unlike foreign direct investments that are put into in assets such as factories and equipment.

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