FOREIGN PORTFOLIO investments went out of the country for a second straight month in April following the delayed approval of the government’s 2019 spending plan and earthquakes that hit Luzon and the Visayas, as well as the ongoing US-China trade war, the Bangko Sentral ng Pilipinas (BSP) reported on Thursday.
Last month saw hot money — called such because of the ease by which these funds enter and leave the economy — post a net outflow of $298.83 million, a reversal of the $279.29-million net inflow seen in April 2018. Still, April’s net outflow was less than the net $739 million that left the country in March.
Gross outflows last month totaled $1.29 billion, higher than the $1.097 billion seen in the same month last year but below the $2.47 billion logged in March.
This offset the $989.98 billion that foreign firms placed in April — lower than the $1.38 billion in gross inflows seen a year ago and the $1.73 billion the prior month.
The central bank said in a statement that the decline in inflows “may be attributed to investor reaction to the delayed approval of the 2019 national government budget and the damage caused by the April 22 earthquake that jolted parts of Luzon and Visayas.”
“Investors also stayed cautious amid the lack of fresh catalysts in the market and ongoing trade negotiations between the United States (US) and China,” the BSP said.
Investors left local financial markets, with net outflows worth $238 million logged for government securities. Net outflows were also logged for transactions involving Philippine Stock Exchange-listed companies at $61 million, as well as other peso-denominated debt and portfolio instruments at less than $1 million each.
Meanwhile, a net inflow of less than $1 million was recorded for peso time deposits.
About 79.2% of investments registered during the month were in PSE-listed securities — mostly property companies, holding firms, banks, food, beverage and tobacco companies, and transportation services companies — while 20.8% went to peso government securities. The balance of less than one percent went to peso time deposits.
The United Kingdom, the United States, Singapore, Hong Kong, and Luxembourg were the top five investor countries for the month, with combined total share of 84.8%, the BSP said.
Ruben Carlo O. Asuncion, chief economist of UnionBank of the Philippines, Inc., said: “First few months saw some general positive signs from the progress of trade negotiations between the world’s biggest economies. It was easy however that two tweets from Trump can quickly turn sentiment into negative tones.”
“With how quickly things can turn negative, our research thinks that it can also be easy to take a U-turn to positive,” Mr. Asuncion added.
Michael L. Ricafort, economist at the Rizal Commercial Banking Corp., said: “On local factors, delay on the 2019 national budget that eventually slowed down economic growth partly contributed to the market volatility… Concerns on El Niño, water shortage were also part of the local risk factors, which were offset by the easing trend in both inflation and interest rates, as well as signals on monetary easing.” — R.J.N. Ignacio