MORE FOREIGN FUNDS left the country in October — marking the biggest outflow in almost a year — led by net outflows from the Philippine Stock Exchange (PSE) and peso-denominated government securities, the central bank reported yesterday.
Foreign portfolio investments posted a $563.42-million net outflow last month, a reversal from September’s $112.63-million and October 2016’s $59.87-million net inflows.
These funds are called “hot money” given the ease by which they enter and leave markets.
Last month saw the biggest net outflow since the $607.31 million that left in November 2016, according to central bank data.
October’s $1.385-billion gross inflows were up 6.8% from September’s $1.296 billion but were down 15% from the $1.633 billion that entered in October last year.
October’s total outflows, however, eclipsed gross inflows that month, as well as funds that went out in September and a year ago. Specifically, $1.948 billion left in October, about 64.5% more than September’s $1.184-billion total outflows and 23.8% more than the $1.573 billion that went out in October last year.
Last month’s total outbound funds were the biggest in over a year or since some $2.081 billion exited the country in September 2016.
The BSP attributed the year-on-year and month-on-month increase in gross outflows to “profit taking”, with the United States remaining the main destination of outflows, accounting for 75.5% of the total. Central bank data showed outflows spiking in September and October, which had seen successive record highs at the PSE that were followed by episodes of correction.
Around 89.8% of total investments went to PSE shares, particularly those of holding companies; property firms; mining; banks; as well as food, beverage and tobacco companies. These transactions yielded $513 million in net outflows.
A tenth of portfolio placements went to peso-denominated government debt papers (but whose transactions resulted in $47-million net outflows) while the balance was infused in other peso-denominated debt instruments ($1-million net inflows) and peso time deposits ($4-million net outflows).
Most of the investments in October came from the US, the United Kingdom, Norway, British Virgin Islands and Luxembourg
The October figure brought year-to-date hot money tally to an $812.17-million net outflow, a reversal from the $1.471-billion net inflows in 2016’s comparable 10 months. The central bank expects a $900-million net outflow for the entire 2017, a reversal from 2016’s net inflow.
Apart from domestic concerns — October saw the end of the five-month battle to retake Marawi City from Islamic State-inspired militants — external developments like expectations of additional interest rate hikes from the US Federal Reserve, global terrorist attacks and tensions in the Korean peninsula influenced investor sentiment. — Melissa Luz T. Lopez