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Hot money inflows to RP drop over profit taking – Friday, 14 October 2016

by October 13, 2016 General

Profit-taking, along with uncertainties in the global economy and some domestic factors resulted in a big drop in foreign portfolio investments to the Philippines in September.
Data released by the Bangko Sentral ng Pilipinas yesterday showed a net outflow of $807.15 million in the ninth month of this year, a reversal from the $427.07 net inflow last August and more than twice the $323.98 million net outflow in September 2015.
The net outflow last September was the highest after the $1.8 billion net outflow in January 2014, which was a result of the possible cut in the Federal Reserve’s $85 billion monthly stimulus that time.
The stimulus program, carried out from 2008 to late 2014, was implemented to lift the world’s largest economy from its worst recession after the Great Depression in 1929-39.
Before it was withdrawn, emerging market economies registered outflows in foreign portfolio investments, otherwise known as hot money due to the speed it comes in and out of an economy.
Total inflows in September amounted to $1.27 billion while outflows totaled $2.08 billion.
The bulk, or about 72.3 percent, of the inflows came from the United Kingdom, United States, Singapore, Malaysia, and Luxembourg while most of the outflows went to the United States at 76.7 percent of the total.