Foreign fund managers withdrew more short-term investments from the domestic financial markets in July amid the uncertainties caused by the COVID-19 pandemic and geopolitical and trade tensions between larger economies, data from the Bangko Sentral ng Pilipinas show.
The BSP said registered foreign portfolio investments yielded a net outflows of $453.17 million in July, larger than the outflows of $235 million in June. This was also a reversal of the $15-million net inflows recorded a year ago.
It said while gross inflows in July reached $719 million, total outflows amounted to $1.172 billion during the month.
The $719-million registered investments in July reflected a 29.5-percent decline from $1 billion recorded in June 2020. About 96.5 percent of the investments were in Philippine Stock Exchange-listed securities (pertaining mainly to utilities companies, holding firms, property companies, banks and food, beverage and tobacco companies) while the remaining 3.5 percent went to investments in peso government securities.
Singapore, the United Kingdom, the United States, Bahamas and Hong Kong were the top five investor countries in July, with combined share of 84.6 percent.
The latest tally in July brought the year-to-date transactions to net outflows of $3.8 billion, resulting from the $10.2-billion gross outflows and $6.4-billion gross inflows for the period.
The BSP said the outflows were brought about by “uncertainties due, among others, to the impact of the COVID-19 pandemic to the global economy and financial system, and other key events earlier in the year such as the geopolitical and trade tensions, and corporate governance issues involving the water concessionaires.”
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 BSP is optional under the liberalized rules on foreign exchange transactions.
Foreign portfolio investments posted net outflows of $1.9 billion in 2019, a turnaround from the $1.2-billion net inflows in 2018.
The country’s balance of payments posted a surplus of $2.43 billion in May, about 2.6 times higher than the $9280 million surplus recorded a year ago.
The BSP earlier It said the surplus in May reflected mainly the inflows arising from the national government’s foreign currency deposits with the BSP and the BSP’s foreign exchange operations and income from investments abroad.
“These inflows were partially offset by the foreign currency withdrawals that the national government made to pay its foreign currency debt obligations during the month in review,” it said.
The May figure brought the total BOP surplus in the first five months to $4.03 billion, compared with the $5.19-billion surplus in the same period last year.