Short-term foreign portfolio investments (FPI), also known as “hot” or speculative money, posted net outflows in April that the Bangko Sentral ng Pilipinas (BSP) attributed to so-called profit-taking by the various fund managers.
The outflows in April marked the second consecutive month that foreign funds looking to profit from stocks and bonds sold in the debt and equity markets in the various markets flowed out on net basis.
According to the BSP, speculative money aggregating $31.14 million exited the country in April as gross inflows of only $1.934 billion during the month paled in comparison to gross outflows of $1.965 billion.
This was the second time the Philippines reported a net outflow of foreign capital, so soon after foreign funds actually flowed inward on net basis four months earlier.
FPI are investments by nonresidents in the Philippines. They are interchangeably known as hot or speculative money because they are very volatile and are pulled in or out the market at the merest hint of trouble or promise of greater rewards elsewhere.
The $31.14-million net outflows in April represented a reversal from $324.77-million net inflows in April last year
A total of 74.3 percent of the registered portfolio investments in April were for the purchase of Philippine Stock Exchange (PSE)-listed securities issued by holding firms, property companies, food, beverage and tobacco companies and telecommunication firms.
The other 24.2 percent, meanwhile, were for the purchase of peso government securities, while the remaining 1.5 percent was deployed in other peso debt instruments.
During the period, the US markets were the top destination of the outflow of funds equal to 84.6 percent of the total.
Along with the US, the UK, Singapore, Luxembourg and Hong Kong were the Top 5 investor-countries for the month, with a combined share to total inflows of 80 percent.