$24M of 'hot money' exited PHL in May – BSP

Foreign portfolio investment or "hot money" registered a net outflow of $24.35 million in May, compared with the net inflows in April and in May 2016, central bank data released on Friday shower.

The reversal in hot money flows likely reflected a more subdued investor confidence on the back of weak corporate earnings and gross domestic product (GDP) data in the first quarter, according to the Bangko Sentral ng Pilipinas (BSP).

Central bank data showed the net outflow last month was a reversal from net inflows of $51.49 million in April and $72.81 million a year earlier.

"This may be attributed to investor reaction to weak first quarter earnings of some corporations and lower-than-expected GDP data of the country for the first quarter of 2017,"the BSP noted.

Union Bank of the Philippines chief economist Ruben Carlo Asuncion noted it may also have been due to bets on a Federal Reserve rate hike.

Despite the net outflow last month, "foreign investors, I believe, still see opportunity in the Philippines," Asuncion said.

Foreign portfolio investment is also called hot money because of the ease by which the fund enters and exit markets.

Total outflow last month reached $1.509 billion, exceeding total inflow of $1.484 billion.

Year-to-date, foreign portfolio transactions registered a net outflow of $543.79 million, a reversal from net inflow of $178 million in the same period last year.

"While outflows were relatively steady, there was a substantial drop in inflows which may be attributed to continued uncertainties arising from domestic and international developments, such as the US airstrike in Syria, global terrorist attacks, the interest rate increase by the US Federal Reserve in March, and the closure order for several mining companies in the Philippines," the BSP said.

The bulk or 79.1 percent of foreign portfolio investment was placed in shares traded on the Philippine Stock Exchange, mainly in banks, holding firms, property companies, food, beverage and tobacco firms, and utilities companies.

Around 18.4 percent went to peso government securities, and 2.5 percent to other peso debt instruments.

The United Kingdom, US, Singapore, Malaysia, and Luxembourg were the top five investor countries last month, with a combined share-to-total of 76.9 percent. The US continued to be the main destination of outflows, receiving 79.2 percent of total remittances. — VDS, GMA News