MANILA, Philippines — More short-term foreign funds exited the Philippines in March, amid a backdrop of heightened uncertainty as financial contagion fears ran high.
Data from the Bangko Sentral ng Pilipinas released Thursday showed foreign portfolio investments recorded net outflows of $70 million last month. Net outflows means more flighty foreign funds shed their positions in the country than those that entered.
This was still a better performance than the $531 million net outflows recorded in February. Year-to-date, net outflows amounted to $309 million.
Foreign portfolio investments are also known as “hot money” because they come and go markets with ease, unlike firmer commitments like foreign direct investments. These funds are very sensitive to domestic and global developments.
March was an exciting time for foreign investments since the collapse of tech sector lender Silicon Valley Bank and Credit Suisse revived fresh fears of another financial crisis.
Sought for comment, Nicholas Antonio Mapa, senior economist at ING Bank in Manila, attributed the exodus to risk factors.
“Heightened risk off tone dominated markets in March after concerns about the banking system spiked due to the shutdown of US banks. This in turn spurred outflows for regional investors,” he said in a Viber message.
Data broken down showed gross hot money outflows inched up 9.5% to $115 million in March.The US, considered a safe haven for investors, took in 67.2% of outflows.
On the other hand, gross hot money inflows skyrocketed 84.7% month-on-month to $1.26 billion in March, with the United Kingdom, United States, Singapore, Luxembourg, and Norway, comprising 86.4% of inflows.
Data showed 64.6% of investments were parked in publicly-listed companies, with the rest funneled into government securities. — Ramon Royandoyan