PH economy reverts to hot money outflows of $545 million in February

MANILA, Philippines – After a decent start to the year, foreign portfolio investments reverted to outflows from the Philippines in February 2018 as the US Federal Reserve's possible rate hike loomed over investors' minds.

The Bangko Sentral ng Pilipinas (BSP) said on Thursday, March 15, that net foreign portfolio investments hit net outflows of $545 million in February.

The result is a reversal from the $162-million net inflow in January and is higher than the $409-million net outflow recorded for February last year.

Foreign portfolio investments are often referred to as "hot money" as these investments can be taken in and out of an economy quickly.

The BSP said February's net outflows "may be attributable to profit taking as well as investor reaction to news of possible rate increases by the US Federal Reserve due to an expected surge in inflation amidst implementation of the US government's tax cuts."

Hot money inflows for February totaled $1 billion, 36.6% lower than the $1.6 billion recorded in January. The central bank pointed out, however, that inflows rose year-on-year by 4.8% or by $47 million from the $981 million in February 2017.

Around 81% of investments for the month were in Philippine Stock Exchange-listed securities, while the remaining 19% went to peso government securities.

The United Kingdom, United States, Malaysia, Hong Kong, Luxembourg, and Singapore were the top 6 investor countries for the month, with a combined share of 85.1%.

Hot money outflows, meanwhile, amounted to $1.6 billion, up 7.7% compared to January's outflows of $1.5 billion and up 13.2% from the $1.4 billion in outflows in February 2017. The US continued to be the main destination of outflows, receiving 73.8% of total remittances.

The BSP has estimated that net outflows for 2018 would amount to $900 million. –