Investor sentiment tempers hot money inflows in September

Chrisee Dela Paz
Investor sentiment tempers hot money inflows in September
Investors' concerns on the US Fed hike, risk-off after the Davao City bombing, and the European Central Bank's decision on its bond-buying program weigh down foreign portfolio investments in September

MANILA, Philippines – Investor jitters over local and international events caused foreign portfolio investments last month to decline by 27.5% from a month ago, the Bangko Sentral ng Pilipinas (BSP) said.

September “hot money” – the investments that enter and leave the country – saw net inflows at $1.3 billion, reflecting a 27.5% decline from the $1.8 billion in August and 6.9% decrease from a year ago’s $1.4 billion.

The BSP said foreign portfolio investments were weighed down by investor sentiment; lingering uncertainty on the timing of the next interest hike in the US; the bombing in Davao City early September which prompted the government to declare a “state of emergency on account of lawless violence” in the country; and the European Central Bank’s decision to discontinue its bond-buying program.

Last month, outflows rose by 56.5% to $807.15 million, a reversal from the $427 million net inflows recorded in August and more than twice last year’s net outflows of $324 million.

Year-on-year, outflows grew by 23% from $1.7 billion. (READ: PH stocks dip over security concerns, political ‘uncertainty’)

Net inflows for Q3

But thanks to the initial public offering of an industrial company as well as the renewed interest in peso government securities (GS), the central bank said transactions for the third quarter posted overall net inflows of $687 million.

This is an improvement from the net inflows recorded in the first quarter ($410 million) and second quarter ($170 million) this year. (READ: Duterte’s tough talk and what it could mean for US, EU investments)

The BSP also noted that in September alone, about 88.7% of investments registered were in Philippine Stock Exchange (PSE)-listed securities (mainly pertaining to holding firms; property companies; banks; telecommunication companies; and food, beverage, and tobacco firms).

The remaining 11.3%, meanwhile, went to peso GS. 

“All transactions resulted in net outflows: PSE-listed securities ($654 million); peso GS ($153 million), and other peso debt instruments (less than $1 million),” the BSP said in a release.

The United Kingdom, United States, Singapore, Malaysia, and Luxembourg were the top 5 investor countries for the month, with combined share totaling 72.3%.

The United States continued to be the main destination of outflows, receiving 76.7% of total remittances, BSP data showed. –

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