Foreign portfolio investments continued to depart the country in December on the lingering impact of the coronavirus crisis, bringing net outflows for full-2020 to $4.24 billion, according to the Bangko Sentral ng Pilipinas (BSP).
Data released on Thursday night showed that net outflows of these investments, or “hot money” — so called because of how easily these enter and exit the economy — reached $523.86 million last month, reversing November’s $226.75-million net inflows, but better than the $320.96-million outflows a year earlier.
The full-year figure was wider than the $1.90-billion net outflows in 2019, and compares with the central bank’s forecast of $2.8-billion inflows for 2020.
In a statement, the Bangko Sentral said the full-2020 net outflows resulted from the $15.91-billion outflows and $11.67-billion inflows for the year.
Broken down, the outflows were observed in Philippine Stock Exchange (PSE)-listed shares ($3.3 billion), peso government securities ($931 million), and other portfolio instruments ($22 million).
“Developments for the year included the ongoing impact of the Covid-19 pandemic on 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.
Hot money inflows slid by 29.7 percent or $4.9 billion from $16.60 billion in 2019. The bulk, or 80.5 percent, of these investments were placed in PSE-listed securities, such as property companies; holding firms; banks; food, beverage and tobacco firms; and information technology companies. The rest were put in government securities.
About 80.5 percent of the investments registered were in PSE-listed securities and the remaining 19.5 percent in peso-denominated government securities.
The United Kingdom, Singapore, United States, Luxembourg and Hong Kong were the top five investor countries during the year. Their investments make up 78.2 percent of the total.
Hot money outflows, meanwhile, slipped by 14 percent or $2.6 billion from $18.50 billion in 2019.
“Majority (or 96.9 percent) of these outflows represented capital repatriation while the remaining 3.1 percent pertained to remittance of earnings,” the central bank said.
The US continued to be the main destination of outflows, accounting for 63.8 percent of the total.
In an outlook, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the hot money data “could improve amid the recent gains in the local financial markets” on the back of more Covid-19 vaccine deals and rollout, the timely approval of the government’s P4.5-trillion national budget this year, and progress on key reform measures.
The further reopening of the economy, including easing some restrictions on public transport, allowing more businesses to operate again, and increasing capacity to help the economy recover further may lead to higher investment valuations in the country, as well as better net hot honey data, he added.
“Large fundraising activities by the largest local companies/conglomerates amid near record-low borrowing/financing costs, through the capital markets, especially via the issuance of bonds and share sales would entail more foreign portfolio investment inflows going forward,” Ricafort said.
Source: ManilaTimes
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