December 2, 2024 | 12:00am
MANILA, Philippines — More short-term funds left the Philippines in October, snapping three straight months of inflows, as global economic uncertainties dampened investor sentiment, the Bangko Sentral ng Pilipinas (BSP) said. Data released by the BSP showed that the net outflow of foreign investments registered with the central bank through authorized agent banks reached $529.68 million in October, 61.4 percent more than the $328.19 million net inflow recorded in the same month last year.
Foreign portfolio investments, also known as hot money or speculative funds, flow regularly among financial markets because investors want to ensure they get the highest short-term interest rates possible.
John Paolo Rivera, a senior research fellow at the Philippine Institute for Development Studies, said uncertainty about global growth, persistent inflationary pressures and the US Federal Reserve’s monetary policy stance likely weighed on investor sentiment.
“While expectations of easing US policy rates could eventually attract funds, the current cautious environment contributed to capital outflows,” Rivera said.
A continued high interest rate environment in the Philippines also affected hot money flows in October, he said.
“Despite some monetary easing by the BSP in 2024, interest rates remain relatively high. This may deter short-term investors seeking more attractive yields elsewhere,” he said.
Rivera also said that geopolitical tensions and local economic risks such as fiscal consolidation and concerns over growth momentum have likely added to investors’ cautious stance.
In October, gross inflows surged by 55.1 percent to $1.48 billion from $954.38 million in the same month last year.
According to the BSP, about 54.5 percent of the total inflow or $807.08 million went to securities listed on the Philippine Stock Exchange (PSE) particularly banks, holding firms, transportation services, property as well as food, beverage and tobacco.
The balance of 45.5 percent or $672.79 million went to peso government securities.
The BSP said 87.8 percent of the total came from the United Kingdom, Singapore, the US, Luxembourg and Malaysia.
On the other hand, gross outflows in October soared by 56.7 percent to $2.01 billion from a year-ago level of $1.28 billion.
The US was still the top destination of outflows, accounting for 44.2 percent or $889.06 million of the total amount pulled out of the Philippines.
From January to October, the Philippines recorded a net inflow of speculative funds amounting to $2.49 billion, reversing the $715.43 million net outflow recorded in the same period last year.
During the 10-month period, gross inflow of foreign portfolio investments jumped by 45.5 percent to $15.02 billion from last year’s $10.32 billion.
Likewise, the gross outflow of speculative funds rose by 13.2 percent to $12.52 billion from $11.06 billion in the comparable year-ago period.
Last year, the Philippines missed its net inflow target of $1 billion as the net outflow of speculative funds amounted to $248.84 million. This was also a reversal from the $886.7 million net inflow in 2022.
Be the first to comment