More ‘hot money’ left the country in March

Dollar and pound banknotes are seen in this illustration taken April 28, 2017. — REUTERS

MORE SHORT TERM foreigners investments left the Philippines than what entered in March, reflperforming heightened uncertainty related to the Russian-Ukrainian war and monetary policy hardening in the United States.

Data from the Bangko Sentral ng Pilipinas (BSP) showed that foreign portfolio investment or “hot money” generated a net outflow of $305.08 million in March, down 43.6% from the 540.97 million dollars in netflnow a year earlier.

However, this was a reversal from the net $274.04 million inflnow in February.

March Net Hot Money Outflows Largest in 8 Months

The March net outflow was also the largest since $339.7 million in July 2021.

The net outflow of foreign portfolio investment reflects volatility in international markets since the start of the Russian-Ukrainian war in late February, the chief economist of Rizal Commercial Banking Corp said. Michael L. Ricafort in a Viber message.

Monetary policy tightening by the US Federal Reserve may also have spurred more hot money out of the Philippines, he added.

Last month, the US central bank raised its key rate by a quarter of a percentage point as part of its fight againstflation. The Fed is expected to raise interest rates by 50 basis points at next week’s meeting, Reuters reported.

Asian Institute of Management economist John Paolo R. Rivera said investors were also at riskff sentiment ahead of the May 9 national elections.

“This may be due to investor sentiment regarding the political landscape ahead as a new administration is about to enter. This may be refleffective market and investor sentiment on politics,” he said in a Viber message.

Former Sen. Ferdinand R. Marcos, Jr. remains ahead in pre-election polls, but a Bloomberg poll showed analysts and investors favor Vice President Maria Leonor G. Robredo as the nation’s next president.

BSP data showed raw results inflSpeculative money flows soared 55% to $1.277 billion in March from $824.23 million a year earlier.

The top five investor economies during the month included the UK, US, Luxembourg, Singapore and Hong Kong, which accounted for 78.4% of foreign portfolio investment inflOuch.

The bulk of the investments went into securities of holding companies; goods; banks; food, beverages and tobacco; and transportation services. The rest was invested in government securities in pesos.

Meanwhile, gross outflows rose 15% to $1.582 billion in March from $1.365 billion a year ago.

In the first quarter, speculative money generated a net outflow of $16 million, down 96.6% from $483 million a year earlier.

International developments as well as risk-off Sentiment ahead of the election is likely to continue to worry foreign investors, Ricafort said.

“For the coming months, more aggressive Fed rate hikes, the ongoing Russian-Ukrainian conflict for more than two months already, some lockdowns in China, as well as election-related uncertainties could be headwinds to the recovery. local economy and financial markets,” he said.

The BSP expects speculative money to generate a net inflow of $4 billion in 2022. — Luz Wendy T. Noble

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