‘Hot money’ outflow jumps 55% in 11 mos

MANILA, Philippines –  The amount of foreign portfolio investments or hot or speculative money that was pulled out of the Philippines surged 55 percent in the first 11 months of the year as the sovereign debt crisis in Europe caused jitters and heavy sell-offs of investments, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Data released by the BSP yesterday showed that outflows of foreign portfolio investments reached $11.49 billion from January to November this year or $4.1 billion higher than the $7.4 billion that were pulled out of the country in the same period last year.

“Outflows rose 55 percent in the wake of the euro zone crisis, with the bulk 91.8 percent representing withdrawals from interim peso deposits,” BSP Governor Amando M. Tetangco Jr. said in a statement.

Tetangco said inflows grew at a slower pace of 33 percent to $15.43 billion in the first 11 months of the year from a year-ago level of $11.59 billion.

The BSP chief pointed out that investments in shares listed at the Philippine Stock Exchange (PSE) inched up by 7.4 percent to $8.3 billion in the first 11 months of the year from $7.7 billion in the same period last year.

Tetangco said bulk of the investments or $2 billion went to holding firms followed by banks with $1.4 billion, telecommunications provider with $1.3 billion, property developers with $1.2 billion, and utility firms with $891 million.

On the other hand, he pointed out that investments in peso-denominated goverment securities surged to 95.7 percent to $6.6 billion from last year’s $3.4 billion as investors sought safer investment instruments outside the  euro zone.

He added that the rest of the registered investments were in peso time deposits with $496 million and money market instruments and unit investment trust funds with $14 million.

Tetangco said major source of hot money include Singapore, the United Kingdom, the United States, Luxembourg, and Hong Kong.

This translated to a lower net inflow of $3.938 billion from January to November this yearor 5.8 percent lower than the net inflow of $4.181 billion booked in the same period last year.

For the month of November alone, hot money that was withdrawn from the Philippines retreated y 14.5 percent to $800.21 million from $936.31 million in the same period last year while inflows plunged 51 percent to $1.29 billion from $2.61 billion. This translated to a net inflow of $490.5 million or 71 percent lower than last year’s $1.67 billion.

“Transactions for the month of November yielded net inflows of $490 million, 106.6 percent higher than the $237 million recorded in the previous month but 70.7 percent lower than the $1.7 billion in 2010 due to investor concerns on the euro zone problems,” he added. –Lawrence Agcaoili (The Philippine Star)