Hot money registers $2.1B net outflow in January-April —BSP

Foreign portfolio investments (FPI) or “hot money” yielded a net outflow of $2.1 billion million in the first four months of 2020 due to uncertainties arising from COVID-19 pandemic and other pressures overseas, the Bangko Sentral ng Pilipinas (BSP) said Thursday.

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

The January to April net “hot money” outflow was recorded as gross outflows of $6.3 billion exceeded $4.2 billion gross inflows for the said period.

The net outflow in FPI during the period is also a reversal from the $37 million net inflows in the same period in 2019.

The central bank attributed the exit of FPI to “uncertainties due, among others, to the impact of the COVID-19 pandemic to the global economy and financial system.”

Other key events earlier in the year such as the continuing geopolitical tensions between the US and Iran; ongoing trade negotiations between the US and China; and renegotiation of the contracts of the country’s water concessionaires also dragged investor sentiment.

For April, net “hot money” outflow stood at $660 million, lower than $961 million net outflow in March, resulting from $1.3 billion gross outflow and $627 million inflow.

The $627-million registered investments for the month reflected a 34.3% decline from the $954 million figure in March and is also the lowest recorded monthly gross inflows since July 2010 —amid weak investment sentiment and halt in economic activities due to COVID-19 pandemic.

Bulk or 91.2% of investments registered were in Philippine Stock Exchange-listed securities mainly to holding firms, property companies, banks, food, beverage and tobacco firms and telecommunication companies.

The remaining 8.8% went to investments in peso government securities.

The United Kingdom, the United States, Singapore, Hong Kong and Switzerland were the top five investor countries for the month, accounting for 85.5% of the total.

Outflows for April at $1.3 billion were lower compared to the level recorded for March at $1.9 billion or by 32.8%.

The US received 61.7% of total outflows. —LDF, GMA News