Foreign portfolio investments yielded $342 million in net outflows in June, a reversal of the $335-million inflows a year ago amid the uncertain global economy, aggressive interest rate hikes in the United States and geopolitical tensions in Eastern Europe.
Latest data from the Bangko Sentral ng Pilipinas showed that the June net outflows were larger than the $270-million net outflows in May. The figure resulted from the $1.4-billion gross outflows and $1.0-billion gross inflows for the month.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the June net outflows were the widest in 14 months, or since April 2021.
Ricafort attributed the outflows to “increased volatility and some sell-off in global financial markets after more hawkish Fed signals and the biggest Fed rate hike since 1994 at +0.75 on June 14, 2022… in an effort to bring down elevated US inflation at new 40-year highs recently”.
“These led to some risks of possible US economic slowdown or even recession in the US,” he said.
The US Fed on Wednesday raised the policy rates by another 75 basis points to contain the surging inflation.
Ricafort said some volatility in global and local financial markets could be expected in the coming months, if the Russia-Ukraine conflict would drag on and global oil and other commodity prices would remain at multi-year highs.
The $1-billion registered investments in June reflected an increase of 7.6 percent from $966 million in May. Majority of the investments (or 77.4 percent) were in Philippine Stock Exchange-listed securities, while the balance went to investments in peso government securities (22.6 percent).
These funds mostly came from the United Kingdom, United States, Singapore, Hong Kong and Switzerland.
Foreign portfolio investments yielded net inflows of $728 million in the first half, a turnaround from the $106-million net outflows in the same period last year.
Portfolio investments are also called “hot money” because of the ease they are invested in and taken out of domestic financial markets.