March net hot money outflow hits $91.51 M

MANILA, Philippines - Net outflows in  foreign portfolio investments  were recorded for the fourth consecutive month in March as global fund managers continued to dump assets from emerging markets like the Philippines in anticipation of the US Federal Reserve’s decision to end  its massive stimulus program  by year-end.

In a report, the Bangko Sentral ng Pilipinas (BSP) said net ouflows of foreign portfolio investments or  hot money amounted to $91.51 million in March, following outflows of $361.09 million in February and $395.14 million in March last year.

Gross inflows in March went down nine percent to $2.128 billion, while gross outflows fell 19 percent to $2.219 billion.

The central bank said the drop in  inflows was due to the Fed’s decision to  wind  down   its $85-billion monthly asset purchases.  

In the first three months of the year,  the country recorded a   net outflow  of $2.337 billion  in foreign portfolio investments,     a reversal of the $1.087-billion net inflow recorded in the same period in 2013.

Gross inflows during the first quarter declined 33 percent to $4.896 billion, while gross outflows climbed 16 percent to $7.192 billion.

The US central bank’s monthly massive purchases of US Treasuries and mortgage bonds currently stand at $55 billion, after three $10-billion cuts done in separate Fed meetings.

The Fed’s monetary actions and the anticipation that higher interest rates will be realized sooner as the stimulus is being taken out gradually from the US economy has prompted investors to reassess their portfolios. This, then, led to sell-offs particularly seen in emerging markets like the Philippines, analysts said.

The bulk or 77 percent of hot money inflows in March were invested in Philippine Stock Exchange-listed securities, while the remaining 23 percent went into peso-denominated government securities.

The US, the United Kingdom, Singapore, Malaysia, and Luxembourg were the top five investor countries in March. The US also continued to be the main destination of outflows.

The BSP expects a net foreign portfolio inflow of only $2.1 billion this year, half of the $4.225 billion recorded in 2013.