BSP: Nearly $2-B ‘hot money’ left PH in 2019
Credit to Author: Mayvelin U. Caraballo, TMT| Date: Thu, 16 Jan 2020 17:04:43 +0000
FOREIGN portfolio investments remained in the negative territory in December, bringing net outflows for full-year 2019 to $1.90 billion, Bangko Sentral ng Pilipinas (BSP) data showed on Thursday.
In a statement, the central bank said the amount reversed the $1.20-billion net inflows registered in 2018. It also said net outflows of such investments, or “hot money” — so called because of how easily these enter and leave the economy — reached $320.96 million last month, lower than November’s $354.32 million and a turnaround of the $278.11-million net inflows a year earlier.
The 2019 tally compares with the Bangko Sentral’s forecast of $8-billion net inflows for the year.
“The net outflows of $1.9 billion may be broken down to net outflows in the following instruments: Philippine Stock Exchange (PSE)-listed shares ($1.7 billion), peso government securities ($228 million), and other portfolio instruments ($22 million),” the BSP said.
It cited ongoing trade tensions between the United States and China; the passage of the Rice Tariffication Law; the May 13 midterm elections; easing inflation; the protests in Hong Kong; and the attacks on Saudi Aramco’s oil facilities in Saudi Arabia, which significantly raised oil prices, as factors for the 2019 outflows.
Others factors were its decision to reduce the reserve requirement ratio for universal/commercial and thrift banks; the rebalancing of the Morgan Stanley Capital International Philippines Index to reflect its new weightings; President Rodrigo Duterte’s strong views on the alleged onerous provisions in Maynilad Water Services Inc. and Manila Water Co. Inc.’s concession agreements; and the US House of Representatives impeaching President Donald Trump.
Hot money inflows totaled $16.60 billion last year, up 3.5 percent from $16.03 billion in 2018.
The bulk, or 77.7 percent, of these inflows were invested in PSE-listed securities and the rest in peso government securities and other portfolio instruments.
The United Kingdom, the US, Singapore, Malaysia and Hong Kong were the top five investor countries for 2019, accounting for 74.3 percent of the total.
On the other hand, hot money outflows of $18.50 billion was a 24.8-percent increase from $14.82 billion the previous year.
Capital repatriation made up 97.1 percent of the outflows, with remittance earning accounting for the rest.
The US remained the main destination of outflows, accounting for 75.1 percent of the total.