PH starts 2018 with hot money net inflows of $162M

MANILA, Philippines – The Philippine economy kicked off 2018 with a net inflow of foreign portfolio investments as it rode the wave of investor optimism in the Philippine Stock Exchange (PSE) for much of January.

Data released by the Bangko Sentral ng Pilipinas (BSP) on February 16 showed that foreign portfolio investment transactions for January 2018 yielded net inflows of $162 million, down 46.2% from the $301 million net inflow seen in the same month last year.

The BSP attributed this to "investor optimism over the passage of the first phase of the government’s tax reform program, positive news on corporate earnings, and expected higher government spending for infrastructure projects."

Foreign portfolio invetsments are often referred to as "hot money" as these investments can be taken in and out of an economy quickly.

The central bank noted that inflows for the month hit $1.62 billion, beating the $1.56 billion and $1.1 billion recorded the previous month and a year ago, respectively.

At the same time, it noted that the total $1.46 billion outflows for the month also surpassed those recorded in December 2017 ($1.1 billion) and January  2017 ($845.6 million).

The bulk or 69.2% of the investments registered during the month were in PSE-listed securities routed mainly to holding firms, banks, property companies, food, beverage and tobacco firms, and utilities companies; with the remaining 30.8% going to peso-denominated government securities (GS).

The PSE index hit as high as 9,058.82 by the end of January before expectations of rising US interest rates drew it back in to as low as 8,487.91 in the second week of February.

Transactions in PSE-listed securities and peso GS yielded net inflows of $80 million and $82 million, respectively, according to the BSP.

The United Kingdom, the United States, Malaysia, Singapore, and Hong Kong were the top 5 investor countries for the month, with a combined share totalling 80.2%.

The United States continued to be the main destination of outflows, receiving 79.9% of total remittances.

The Philippines ended 2017 with hot money net outflows of $205 million. This year, the BSP is projecting net outflows of $900 million –