FPI net outflows in May hit $206 million, up from $24 million

FOREIGN investors were not keen on betting on the Philippines for short-term returns in May, as foreign portfolio investments (FPI) were down during the month.

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed a significant rise in the FPI net outflows in May this year, hitting $206 million. This compared to the $24-million net outflows recorded in May 2017. FPI are known as “hot” or “speculative” money because they are easily pulled in and out of the local platforms in reaction to the slight change of global and local sentiment.

The weaker hot money performance in May is contrasted by the positive performance of foreign direct investments (FDI)—its long-term counterpart—in the first quarter of the year.

FDI, or those investments put in by foreign players aiming for longer yield, rose 27 percent in March.

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The BSP attributed hot money net outflows to local and international worries that hound investors. On the local front, investors were particularly concerned about the weaker peso and the effect of higher oil prices on local inflation.

The local currency’s value fell further on Thursday, hitting 53.27 to a dollar, from  53.23 to a dollar in the previous day’s trade. This is a fresh low for the country’s currency, as the peso has not been this weak since June 29, 2006, when it hit P53.55 to a dollar.

Inflation in the country, meanwhile, hit 4.6 percent in May, the highest for the country in about five years.

Concerns were not isolated among local issues, the BSP said, as “hot money” investors were also swayed by the higher US treasury yields and the renewed geopolitical tension between the US and China.

The BSP said the United Kingdom, US, Singapore, Malaysia and Hong Kong were the top 5 investor-countries for the month, with combined share to total 74.8 percent.

Broken down, about 80.2 percent of investments registered during May 2018 were in PSE-listed securities—mainly to banks, holding firms, property companies, food, beverage and tobacco firms, and transportation services companies.

The balance went to peso-government securities and other peso-debt instruments. In the first five months of the year, however, FPIs still registered in the greens as they hit a net inflow of $797.2 million. This is a reversal of the $543.79-million net outflow seen in the same five-month period in the previous year.

 

 

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Bianca Cuaresma graduated cum laude from the University of Santo Tomas (UST) with a degree in AB Journalism. She was with the BusinessMirror during her internship in 2012 where she was assigned at the Department of Foreign Affairs (DFA) beat. She continued to be of service to the paper after she graduated in 2013. In 2014, she was awarded as the Reporter of the Year by the paper for her coverage in the Bangko Sentral ng Pilipinas (BSP). She is a BusinessMirror reporter for 3 years now, and has covered general assignments and agencies related to banking and finance in the country.