The Bangko Sentral ng Pilipinas (BSP) expects foreign portfolio investments to exit the Philippines this year and the next, extending a net outflow seen since 2014, given continued uncertainty in the global financial markets.
In line with downward revisions to expected remittances, dollar reserves and other macroeconomic forecasts for the year, the central bank revised its 2015 projection for foreign portfolio investments, also called hot money.
Monetary authorities now expect a $200-million net outflow this year, a reversal of its earlier estimate of a $1.4-billion net inflow.
This means a repeat of last year, when the country also recorded a net foreign portfolio investments outflow of $200 million.
“For the foreign portfolio investments, we see that the there will be higher net outflow this year, reflecting the increase or more repayments of funds issued to non-residents,” said Zeno Ronald Abenoja, director of the central bank’s Department of Economic Research.
In November, the country 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 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.
For 2016, the central bank also expects hot money to post a larget net outflow of $1.3 billion.
“For 2016, we observe some deterioration for foreign portfolio investments. This is something that we do expect because of the continued uncertainties in the financial markets,” central bank Deputy Governor Diwa Guinigundo said.
Guinigundo said uncertainties surrounding China, other emerging markets, as well as the next moves of the US Federal Reserve would continue to affect financial markets worldwide.