"Hot money," or foreign portfolio investments, continued to leave the Philippines in October, the country's central bank BSP said on Thursday.

The central bank posted a net foreign portfolio outflow of US$390 million in October 2008, up from the US$312.2 million net outflow in September.

"Risk aversion further intensified given the global financial crisis and slowdown in the US (United States) and other major economies," BSP Governor Amando Tetangco said in a statement.

"This development has resulted in the withdrawal of investments out of emerging markets for investment in the US, primarily in Treasury securities," he added.

Hot money, or foreign fund vulnerable to shifts in sentiments and expectations, is invested in the money market, stocks and government securities.

For the first 10 months of the year, transactions resulted in a net outflow of US$911.5 million, in sharp contrast to the nearly US$3.7 billion net inflow for the comparable period in 2007.

The year of 2008 has been characterized by investor risk aversion arising from heightened worries on the state of the global economy following the US subprime mortgage crisis and the meltdown in major financial markets, said the central bank.

By type of instrument, investments in listed shares and money market instruments posted net inflows of US$1.9 billion and US$2.6 million, respectively, while placements in peso-denominated government securities and peso bank deposits showed net outflows of US$96.6 million and US$2.7 billion, respectively.

Gross investment inflows totaled US$7.6 billion during the period, a 43 percent decline from the US$13.4 billion level recorded in the same period last year. The United Kingdom, Singapore and the United States remained the top three investor countries with their combined contribution of 69 percent of investment funds during the period.

Gross capital outflows aggregated US$8.5 billion, a 13 percent drop from last year's over US$9.7 billion. These came from withdrawals of investments from listed shares, government securities and money market instruments and peso bank deposits.

The central bank had earlier expected that the net foreign portfolio investments will fall to US$700 million this year from last year's US$3.5 billion.

(Xinhua News Agency November 14, 2008)