Over $400 M foreign funds at net outflow in February

MANILA, Philippines -  Foreign portfolio investments or hot money flew out of the Philippines in February as investors took profits due to concerns about the interest rate hike in the US, the policies of the Trump administration as well as the closure of several mining companies.

Data released by the Bangko Sentral ng Pilipinas (BSP) showed a net outflow of $409.01 million in February, reversing a net inflow of $57.74 million recorded in the same month last year.

For the first two months a net outflow of $107.77 million was recorded, 49.4 percent higher than the $72.11 million net outflow registered in the same period last year.

 “Developments in the domestic and international fronts weighed down on investor sentiment,” the BSP said.

It pointed out shocks include concerns on trade and immigration policies of US President Donald Trump as well as the closure and suspension of several mine sites nationwide.

Last Feb. 2, Environment Secretary Regina Lopez ordered the closure of 23 of the country’s 41 operational mines and suspended five others for alleged violations including being located in watersheds and polluting bodies of waters.

This was followed by the cancellation of 75 mineral production sharing agreements (MPSAs) still in the pre-operation stage last Feb. 14.

Foreign portfolio investments or hot money are referred to as speculative funds controlled by investors who actively seek short-term returns and high interest rate investment opportunities.

The BSP said inflows amounted to $981.2 million in February, 8.2 percent lower than the $1.07 billion booked in the same period last year.

About 91.3 percent of the investments registered in February were in securities listed at the Philippine Stock Exchange (PSE) particularly banks, holding companies, property developers, utilities as well as food, beverage and tobacco firms.

On the other hand, 8.7 percent of the inflows went to peso government securities. Major source of speculative funds include the United Kingdom, US, Malaysia, Hong Kong, and Norway.

The BSP said outflows surged 37.6 percent to $1.39 billion in February from $1.01 billion a year ago due to profit taking and withdrawals from investments in peso government securities.

The central bank said transactions in peso government securities yielded a net outflow of $318 million in February followed by PSE-listed securities with $88 million, and other peso deposit instruments with $3 million.