Full-year investment flows in PH still in the red even after push from IT firm’s IPO

by Daxim L. Lucas, the Philippine Daily Inquirer, 26 Nov 2020

MANILA, Philippines—So-called hot money investments in the Philippines yielded net inflows of $439 million in October after seven straight months of net outflows that started in March, according to the Bangko Sentral ng Pilipinas (BSP).

Data provided provided by the regulator showed that the positive figure came as gross inflows of $1.4 billion outpaced the $913 million gross outflows for October.

This was also the reversal of net outflows of $494 million in September.

The central bank said nearly half, or 46.1 percent, of investments in listed securities in October were for shares of an information technology company that recently had its initial public offering. The BSP was referring to the sale of shares in Converge ICT Solutions.

The $1.4 billion registered investments for October is 127.8 percent higher than the $594 million recorded in September, an increment of $759 million.

According to the BSP, 78.8 percent of investments registered were in Philippine Stock Exchange-listed securities from IT companies, banks, holding firms, property firms and food, beverage and tobacco companies.

The remaining 21.2 percent went to investments in peso-denominated government securities.

The United Kingdom, the United States, Singapore, Luxembourg and Hong Kong were the top five investor countries for the month, with combined share to total at 80.9 percent.

Outflows for October of $913 million were lower compared to the level recorded for September—$1.1 billion—by 16 percent or by $174 million.

The US received 64.6 percent of total outflows.

Foreign portfolio investment transactions from January to October 2020 yielded net outflows of $3.9 billion resulting from the $12.9 billion gross outflows and $9 billion gross inflows for the period.

The BSP said it was higher than the $1.2 billion in net outflows recorded in the same period in 2019.

This, the BSP said, was “brought about by uncertainties due, among others, to the ongoing impact of the COVID-19 pandemic” on global economy and financial system.

“International and domestic developments, such as geopolitical tensions, certain corporate governance issues and extended quarantine measures in select regions in the country” added to the woes, said the BSP.

Year-to-year transactions for all investments—PSE securities, peso bonds and others—resulted in net outflows.

TSB