PH 'hot money' hits net inflow of $482M in March

MANILA, Philippines – Transactions of foreign portfolio investments hit a net inflow of $482 million in March 2016, improving on the net inflow of $58 million in February and showing a dramatic turnaround from the $22 million net outflow recorded at the same time last year.

Foreign portfolio investments, often called "hot money" as they constitute foreign capital that can move in and out of the country quickly, rose to $1.7 billion or 58.1% higher than February's total, the Bangko Sentral ng Pilipinas (BSP) said in a statement on Thursday, April 14.

The central bank attributed the increase to renewed investor confidence in government securities as well as the US Fed signaling that it will raise interest rates just twice this year compared to its original plan of 4 hikes.

The BSP maintained its own interest rates at 4% overnight borrowing and 6% overnight lending last month amid manageable inflation so far this year.

The BSP noted, however, that registered investments were higher at $2.1 billion last year due to major stock right offers by local financial enterprises.

Outflows for March increased by $196 million or 19.4% compared to February due to profit taking. The central bank pointed out, however, that year-on-year outflows have so far declined by $897 million or 42.6%.

About 72% of investments registered in March were in PSE-listed securities – mainly holding firms, banks, food, beverage and tobacco firms, property companies, and telecommunication companies.

The remaining 28% were in peso government securities. Transactions in PSE-listed securities and peso government securities yielded net inflows of $77 million and $405 million, respectively.

The United States, Singapore, United Kingdom, Switzerland, and Hong Kong were the top 5 investor countries for the month, with combined share totaling 79.2%.

Foreign direct investments up

Earlier this week, the BSP also announced that foreign direct investments (FDIs) reached $587 million in January 2016, more than doubling its total in January last year of $263 million. 

All FDI components recorded increases, the BSP said, which signals investor optimism in the growth potential of various local industries, as well as confidence in the country's macroeconomic fundamentals. –