Hot money flees Philippines in August; net outflow reaches $542 M

MANILA, Philippines - More foreign portfolio investments or hot money fled the Philippines after a global stock market rout late last month, prompting investors to take profits.

According to the Bangko Sentral ng Pilipinas (BSP) foreign portfolio investments recorded a net outflow of $542.52 million in August, a complete reversal of the net inflow of $483.45 million in the same period last year.

Inflows of hot money into the Philippines fell 46 percent to $1.11 billion in August from $2.07 billion in the same month last year, while outflows inched up by 4.7 percent to $1.66 billion from $1.58 billion.

The BSP said outflows grew due to profit taking. Foreign portfolio investments are also known as hot money since these are speculative capital flows that move very quickly in and out of markets.

About 88.7 percent of investments registered in August were in listed securities at the Philippine Stock Exchange (PSE) particularly in holding companies, banks, property developers, telecommunication providers as well as food, beverage and tobacco firms.

On the other hand, about 10.8 percent of total inflows last month were invested in peso-denominated government securities.

The central bank said the rest of the investments were in peso time deposits and other peso debt instruments.

In August, the BSP said foreign portfolio investments in PSE-listed securities recorded a net outflow of $323 million followed by peso-denominated government securities with $220 million, and peso time deposits and peso debt instruments with $4 million.

Only transactions in peso time deposits last month yielded a net inflow of $4 million.

The PSE index was dragged down by a global stock market rout last Aug. 24 as it booked its 11th biggest recorded drop of 6.7 percent to close at 6,791.01.

The BSP said hot money from the US, United Kingdom, Singapore, Luxemburg, and Hong Kong accounted for 82.3 percent of total inflow, while 81.4 percent of the outflows went back to the US.

Foreign portfolio investments recorded a net outflow of $64.25 million from January to August  compared with a net outflow of $572.83 million.

Inflows inched up 2.6 percent to $14.59 billion from January to August compared to $14.22 billion in the same period last year, while outflows retreated by almost one percent to $14.65 billion from $14.79 billion.