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Friday, March 29, 2024

Fund managers withdraw more hot money from PH

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Foreign fund managers withdrew more investments from the domestic financial markets in October as inflation rate hovered at a nine-year high of 6.7 percent and the trade war between the United States and China intensified.

Data from the Bangko Sentral ng Pilipinas over the weekend showed that registered foreign portfolio investments or “hot money” posted a net outflow of $68 million in November.

The figure, however, was lower than the $440-million net outflow in September 2018 and $563-million net outflow in October 2017.

“The deficit may be attributed to investors’ reaction to the country’s September inflation data coupled with the continuing trade tensions between the US and China,” the Bangko Sentral said in a statement.

Inflation in September accelerated to a nine-year high of 6.7 percent from 6.4 percent in August, triggered by faster increases in the prices of food and oil.  It stayed at 6.7 percent in October.

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About 68.8 percent of investments registered during the month were in Philippine Stock Exchange-listed securities, mainly holding firms, food, beverage and tobacco firms, banks, property companies, and telecommunication companies.

The balance went mostly to peso government securities. Transactions in peso GS and peso time deposits yielded net inflows of $233 million and less than $1 million, respectively; while net outflows were noted for transactions in PSE-listed securities ($301 million) and other peso debt instruments (less than $1 million). 

The United Kingdom, the United States, Singapore, Norway, and Luxembourg were the top sources of hot money in October.

Data also showed that hot money a yielded net inflow of $94 million as of Nov. 2, a turnaround from the $812-million net outflow in the same period last year.

Foreign portfolio investments are also called hot money because of the ease they are invested in and taken out of the domestic financial markets.

Registration of inward foreign investments with the Bangko Sentral ng Pilipinas is optional under the liberalized rules on foreign exchange transactions. 

The Bangko Sentral said it expected a net outflow of $900 million in hot money this year, taking into account the sluggish global economy and the lingering trade tensions between the US and China.

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