Metro Manila (CNN Philippines, February 20) — Foreigners pulled out their investments in January, the central bank said, spooked by uncertain water supply contracts and the global novel coronavirus.
The Bangko Sentral ng Pilipinas (BSP) tallied a $486.1 million net outflow of foreign portfolio investments for the month, reversing the $762.82-million net fund inflow in January 2019.
These investments are often called “hot money” as they can be easily placed or withdrawn in local assets, such as shares in the Philippine Stock Exchange or investments in debt papers, time deposits, and unit investment trust funds or UITFs.
Global investors betted $1.24 billion in local instruments, but withdrew $1.72 billion in the same month.
The central bank attributed the sustained three-month slump to market jitters drawn from tensions between the United States and Iran and the ongoing trade negotiations between US and China. The “renegotiation” of the contracts of water firms Maynilad and Manila Water also spooked investors, while the rapid spread of the novel coronavirus originating from Wuhan, China also had investors holding back on big bets.
The biggest investment sources were those in the United Kingdom, the US, Singapore, Luxembourg, and Hong Kong. Around 62 percent of the withdrawn capital were brought to the US, which is considered a safe haven for investments.
Two-thirds of the capital flows went into shares of stock, in favor of property companies; holding firms; banks; food, beverage and tobacco firms, and telecommunication companies, the BSP said. A third went into government-issued debt papers.
