Hot money yields net outflows

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    Transactions on BSP-registered foreign portfolio investments  for September 2019 yielded net outflows of $232 million as a result of the US$1.5 billion outflows which more than offset the $1.3 billion inflows for the month.  This net outflow, however, is an improvement from the net outflows noted in August 2019 ($392 million).

    The $1.3 billion registered investments reflected a 7.2 percent increase from the $1.2 billion figure in August.

    About 80.2 percent of investments registered during the month were in PSE-listed securities while the remaining 19.8 percent went to investments in Peso GS. The United Kingdom, the US, Singapore, Malaysia, and Luxembourg were the top five investor countries for the month, with combined share to total at 72.3 percent.

    On the other hand, outflows for the month ($1.5 billion) were slightly lower compared to the level recorded for August 2019 ($1.6 billion or by 4.5 percent).  The US received 75.0 percent of total outflows.

    Domestic and international developments for the month included: ongoing trade tensions between the US and China; attacks on Saudi Aramco’s oil facilities in Saudi Arabia which triggered the largest jump in oil prices in decades; the US Federal Reserve’s decision to cut interest rates; the BSP’s decision to cut interest rates and the reserve requirements ratio of banks; and the impeachment inquiry against US President Donald Trump.

    Year-on-year, registered investments were 75.1 percent higher than the $743 million level recorded in September 2018.  Similarly, gross outflows were higher than the outflows noted a year ago ($1.2 billion or by 29.5 percent).  In contrast, net outflows for the month was lower from the net outflows ($440 million) noted for the same period a year ago.

    Registration of inward foreign investments with the BSP is optional under the liberalized rules on foreign exchange transactions.

    Without such registration, the foreign investor can still repatriate capital and remit earnings on his investment but the foreign exchange will have to be sourced outside the banking system.