This year, the Bangko Sentral ng Pilipinas (BSP) is expecting a net foreign portfolio investment inflow worth $8.2 billion.
Business newspaper Business World reported that this target is according to the forecast analysts in the central bank gave in December last year.
Also known as hot money, foreign portfolio investments logged a net outflow worth $1.9 billion last year.
On Thursday, the BSP pointed out that hot money yielded a net outflow worth $486.1 million in January 2020.
This hot money outflow last month was more significant than the net outflow amounting to $320 million witnessed in December 2019.
Besides, this is a turnaround of the $762.82-million net inflow registered in January last year.
The BSP confirmed that more foreign capital flowed outside the country than what came in during the first month of the year.
The central financial institution of the Philippines explained that various developments contributed to this scenario.
The renegotiation of the agreements between Philippine water concessionaires is one of these factors.
Another is the investors’ anxiety on the escalation of the novel coronavirus that began in China’s Wuhan, the capital of Hubei province.
The BSP also pointed to the ongoing trade talks between China and the United States as a development affecting hot money outflows.
The central bank also mentioned the lingering geopolitical strife between Iran and the United States.
It remarked that it is among the January background events impacting the foreign portfolio investments.
Nicholas Antonio T. Mapa is the senior economist at ING Bank NV-Manila. He stated that the events in January made investors find relatively secure investment havens.
Meanwhile, the BSP explained that over half of 65.9 percent of the portfolio investments found their way into the Philippine Stock Exchange-listed securities.
Telecommunications firms, beverage, food, and banks were among these securities. Holding companies, property firms, and tobacco establishments are also part of this list.
Meanwhile, the BSP cited that the remaining 34.1 percent proceeded to peso government securities.
The top five investor nations in the Philippines consist of Hong Kong, the United Kingdom, Luxembourg, Singapore, and the United States, the central bank said.
In January, these investor territories possessed a combined share amounting to 79 percent.
Meanwhile, the start of this year saw gross inflows totaling to $1.235 billion. These figures are lower compared to the $2.061 billion recorded in January 2019.
Nevertheless, these figures are higher as compared to in December 2019 that logged $1.114 billion.
As for the gross outflows, they amounted to $1.721 billion in January. These figures are higher than the $1.299 billion posted last year.
They are also higher than the $1.435 billion witnessed last December. Foreign portfolio investments have the other name, “hot money.”
Economic experts explain that this fact is because of the effortlessness by which these kinds of funds come and go from a country’s economy.
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