Fund managers pulled out $4.2 billion from the Philippine financial markets last year amid the prolonged impact of the COVID-19 pandemic, data from the Bangko Sentral ng Pilipinas showed over the weekend.
Registered foreign portfolio investments—also called hot money—yielded net outflows of $4.2 billion in 2020, the highest on record. This was a result of the $15.9-billion gross outflows and $11.7-billion gross inflows last year.
The 2020 net outflows were also bigger than the $1.9-billion net outflows in 2019.
Data showed that the net outflows last year included net outflows in Philippine Stock Exchange-listed shares ($3.3 billion); peso government securities ($931 million); and other portfolio instruments ($22 million).
The $11.7-billion total registered portfolio investments in 2020 fell 29.7 percent from $16.6-billion level in 2019. These investments were predominantly in PSE-listed securities (80.5 percent) mostly in property companies, holding firms, banks, food, beverage and tobacco firms and information technology companies, while the balance (19.5 percent) were invested in peso government securities.
The United Kingdom, Singapore, the United States, Luxembourg and Hong Kong were the top five investor countries last year, with combined share of 78.2 percent
“Developments for the year included the ongoing impact of the COVID-19 pandemic to the global economy and financial system, along with international and domestic developments throughout the year such as geopolitical tensions, certain corporate governance issues and extended community quarantine measures in various regions in the country,” the BSP said.
The recorded outflows of $15.9 billion in 2020 were also lower compared to the previous year’s $18.5 billion by 14 percent or $2.6 billion. Majority or 96.9 percent of these outflows represented capital repatriation while the remaining 3.1 percent pertained to remittance of earnings. The US continued to be the main destination of outflows with 63.8 percent of the total.
The BSP said that in December, portfolio investments posted net outflows of $523.9 million, higher than the $321-million net outflows a year ago.
The BSP expects hot money to recover this year with net inflows of $3.5 billion.
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.