Hot money outflows total $545 M in Feb.

Foreign portfolio funds in February reversed to a net outflow of $545 million from $162-million inflows of the previous month as investors withdrew funds for profits, according to the Bangko Sentral ng Pilipinas (BSP).

The net withdrawals of these speculative investments were also higher than February, 2017’s $409 million.

The BSP said the hot money outflows “may be attributed to profit taking as well as investor reaction to news of possible rate increases by the US Federal Reserve due to an expected surge in inflation amid implementation of the US government’s tax cuts.”

In a statement, the central bank said the February registered foreign portfolio investments fell 36.6 percent to $1 billion from $1.6 billion in January. On a year-on-year basis, inflows increased by 4.8 percent from $981 million.

About 81 percent of investments were placed in listed securities such as holding firms, property companies, banks, food, beverage and tobacco firms, and casinos and gaming companies.

Peso government securities accounted for 19 percent of hot money flows.

The top six investor countries were the United Kingdom, US, Malaysia, Hong Kong, Luxembourg, and Singapore. These countries accounted for 85.1 percent of inflows.

The BSP said outflows of $1.6 billion in February, in the meantime, were up 7.7 percent from January’s $1.5 billion, and 13.2 percent from $1.4 billion same time in 2017. The US continued to be the main destination of outflows, receiving 73.8 percent of total remittances, it said.

Under BSP rules, the registration of inward foreign investments is optional. However a registration with the central bank will entitle the investor or the representative to buy foreign exchange from authorized agent banks and/or their subsidiary/affiliate foreign exchange corporations for repatriation of capital and remittance of earnings that accrue on the registered investment.