Hot money posts net outflows in Jan

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NET foreign portfolio investments continued to post outflows in January given continued concerns over global developments such as China’s slowdown and plunging oil prices, the Bangko Sentral ng Pilipinas reported on Thursday.

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January’s net hot money outflow of $129.85 million was lower than the $170.52 million recorded in December 2015, the central bank said. A year earlier, the country saw foreign portfolio investments hit a net inflow of $592.15 million.

Total inflows eased to $820.40 million from December’s $1.234 billion and the $1.196 billion posted a year earlier. Total outflows, meanwhile, fell to $950.25 million from $1.405 billion the previous month and January 2015’s $1.604 billion.

The central bank, in a statement, attributed the lower portfolio investments to “global developments (economic slowdown in China, escalating tensions in the Middle East, geopolitical concerns in North Korea, and plunging oil prices) that adversely influenced overall market sentiment.”

Most of the registered inflows, or 89.3 percent, went to Philippine Stock Exchange-listed firms. The funds were used to purchase shares in holding firms, property developers, food/beverage/tobacco firms, banks and utilities.

Another 10 percent went to peso government securities (GS) and 0.7 percent was invested in other peso debt instruments (OPDIs) and peso time deposits (TD).

PSE-listed securities recorded a net outflow of $44 million. Peso GS, OPDIs and peso TDs, on the other hand, yielded net inflows of $92 million, $4 million and $2 million, respectively.

The United States, the United Kingdom, Singapore, Luxembourg and Belgium were the top five investor countries for the month with a combined share of 78.9 percent.

The US was the main destination of outflows, accounting for 87.6 percent of the total.

Also called hot money because of the ease by 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 assets such as factories and equipment.

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

A larger net outflow of $1.3 billion is expected for 2016 given uncertainties surrounding China, other emerging markets, as well as the next moves of the US Federal Reserve.

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