Hot money outflows hit $4.4 billion in 4 months

MANILA, Philippines —  Foreign portfolio investments exited the Philippines in the first four months as investors turned more cautious amid geopolitical tensions, a strong dollar and uncertainty over global interest rates. Preliminary data from the Bangko Sentral ng Pilipinas  (BSP) showed registered foreign portfolio investments posted a net outflow of $4.41 billion from January to April, reversing the $923.34-million net inflow recorded in the same period last year.

These investments, also known as hot money because of the ease by which the funds enter and leave the economy, cover foreign investments registered with the BSP through authorized agent banks.

Gross outflows doubled to $12.97 billion from $6.48 billion a year earlier, outpacing the 15.7-percent rise in gross inflows to $8.56 billion from $7.4 billion.

SM Investments Corp. group economist Robert Dan Roces said the April outflow reflected weaker investor appetite amid external headwinds.

“April’s net outflow came as investors turned more cautious amid geopolitical tensions, a strong dollar and uncertainty over global interest rates,” Roces said.

“Foreign funds tend to move quickly when risk sentiment shifts, and that’s what we saw,” he said.

In April alone, hot money posted a net outflow of $1.6 billion, reversing the $857.12-million net inflow recorded in the same month last year. It also marked the second straight month of withdrawals from registered foreign portfolio investments.

Gross inflows in April fell by 39.6 percent to $1.51 billion from $2.5 billion in the same month last year. On the other hand, gross outflows surged by 89.7 percent to $3.11 billion from $1.64 billion.

By investment instrument, peso-denominated government securities accounted for the bulk of foreign portfolio investment activity in the first four months of the year.

Inflows into government securities reached $5.43 billion during the January to April period, accounting for about 63 percent of total inflows. However, this was offset by $8.5 billion in outflows, resulting in a net outflow of $3.07 billion.

Publicly listed companies on the Philippine Stock Exchange (PSE) also registered a net outflow of $1.34 billion during the four-month period, as inflows of $3.13 billion were outpaced by $4.47 billion in outflows.

In April, government securities posted a net outflow of $1.06 billion, while PSE-listed securities recorded a net outflow of $545 million.

Roces said foreign portfolio flows could remain volatile in the near term as investors continue to monitor developments overseas.

“In the coming months, flows may remain choppy, with periods of both inflows and outflows, depending on how global markets, the US Federal Reserve and the peso evolve,” he said.