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‘Hot money’ still exits – BSP

For the coming months, further re-opening of the economy and sustained pick-up in economic recovery would fundamentally help improve investments valuations and in turn, net foreign portfolio investments data.

Joshua Lao

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The country continues to bleed foreign currency as foreign portfolio investments, also known as hot or speculative money, posted net outflows for the month of August 2020.

Latest data from the Bangko Sentral ng Pilipinas (BSP) reveals that BSP-registered foreign portfolio investments for the month yielding net outflows of $127 million as gross outflows of $793 million surpassed gross inflows of just $667 million.

Despite the waning investments, the BSP said the latest figure proves to be smaller compared to the month-ago figure of $453 million net outflows.

Still, the registered investments of $667 million in August was lower by 7.3 percent versus the listed $719 million in July.

Bulk or 84.3 percent of the inflows were placed in securities listed in the local bourse, while the remaining 15.7 percent went to peso-denominated government IOU.

By country source, the United States (US), Singapore, United Kingdom, Hong Kong and Luxembourg comprised the top five investor countries for the month, with combined share total at 82.6 percent.

While the gross outflows of $793 million exceeded inflows in August, such proved to be notably lower compared to the registered $1.2 billion month-ago, majority of which exited to the US.

Rizal Commercial Banking Corp. chief economist Michael Ricafort recognized the latest BSP data as an improvement versus previous numbers owing partly to the record-high issuance of the Bureau of Treasury’s Retail Treasury bonds along with other corporate bond offers.

“For the coming months, further re-opening of the economy and sustained pick-up in economic recovery would fundamentally help improve investments valuations and in turn, net foreign portfolio investments data,” Ricafort explained.

“Going forward, any sustained tapering off in new COVID-19 cases and any successful development and deployment of vaccine/s for COVID-19 would also help economic recovery prospects gain further traction that help improve investment valuations,” he added.

BSP projects net inflows of $2.4 billion by year-end, a major revision from its earlier $8.2 billion outlook owing to the serious impact of the pandemic.

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