Metro Manila (CNN Philippines, January 28) – The coronavirus pandemic that crippled the global economy and financial system contributed to the decrease in “hot money” outflows in the country last year.
The COVID-19 crisis led to a deceleration in global economic activity, with the travel and tourism sectors hit the hardest. Most of the world is currently in recession, with millions of people laid off or saw lower incomes. In turn, these crimped consumer spending and demand for goods.
“Developments for the year included the ongoing impact of the COVID-19 pandemic to the global economy and financial system, along with international and domestic developments throughout the year such as geopolitical tensions, certain corporate governance issues and extended community quarantine measures in various regions in the country,” the Bangko Sentral ng Pilipinas said in a statement.
BSP-registered foreign portfolio investments (FPIs) for 2020 yielded net outflows of $4.3 billion, or over ₱206 billion, as gross inflows reached $11.7 billion and gross outflows of $15.9 billion.
The $11.7 billion gross inflows of BSP-registered FPIs last year reflected a 29.7% decrease compared to the $16.6 billion level in 2019.
These FPIs were predominantly investments in PSE-listed securities (80.5 %) mostly in property companies, holding firms, banks, food, beverage and tobacco firms, and information technology companies. The remaining 19.5% balance was invested in Peso GS.
The United Kingdom, Singapore, United States, Luxembourg, and Hong Kong were the top five investor countries last year, with a combined share of 78.2%.
Meanwhile, the $15.9 billion gross outflows in 2020 were also lower compared to previous year’s $18.5 billion tally. Around 96.9% of these outflows were from capital repatriation while the remaining 3.1% came from remittance of earnings.
The US continued to be the main destination of outflows with 63.8% of total.
The BSP announced earlier this month that foreign direct investments inflows netted $423 million in October 2020, the lowest since March – dropping 24.5% from the $561 million recorded in October 2019. The Central Bank said surging COVID-19 infections abroad likely held back foreign investors from making big bets to the Philippines.
