Portfolio funds fled the PHL in first half

Short-term foreign investments flowed back to the Philippines in June after having flowed out on net basis in May, the Bangko Sentral ng Pilipinas (BSP) said on Thursday.

Latest data show foreign portfolio investments (FPI) flowed back in on net basis to $79.56 million.

This was a reversal from net foreign portfolio outflows totaling $24.35 million in May.

This brought the gross FPI in June to $2.02 billion, higher by 35.8 percent, from only $1.5 billion in May. This more than offsets the gross outflows of $1.94 billion in June.

The BSP attributed this development to positive investor sentiment generated by the anticipated resolution of the conflict in Marawi City, accelerated net foreign buying and the approval by Congress of the first of a number of tax-reform programs.

FPI are more popularly known as “hot” or “speculative” money because they are easily pulled in and out of the local platforms at the merest change in global or local sentiment.

But, no matter the higher FPI in June, this was not enough to bring the year-to-date FPI to positive territory, as the aggregate flow of foreign money showed a net drain by $460.83 million.

This was a reversal from $593.87 million net inflows seen in the same period last year.

The BSP said this was “due to certain domestic and international developments, such as the US air strike against Syria, global terrorist attacks, interest-rate increases by the US Federal Reserve, political turmoil in the US and the closure order for several mining companies in the country.”

The US, the UK, Singapore, Malaysia and Luxembourg were the top 5 investor countries during the month, with combined share reaching 80.1 percent. Meanwhile, the US continued to be the main outflow destination, receiving 64.7 percent of total remittances.

The BSP also said 82 percent of investments registered in June were in listed securities (pertaining to mainly holding firms, property companies, telecommunications firms, banks and utilities companies) traded at the Philippine Stock Exchange.

In particular, 17.2 percent went to peso-denominated government securities, and the balance was in other peso-debt instruments.


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