Hot money inflow seen to slow in H2

MANILA, Philippines - Election-related risks partially driving the financial markets are expected to temper in the second half of the year, the chief economist of the Department of Finance said.

“International uncertainty continues as the world awaits announcements from various central banks,” Finance Undersecretary Gil Beltran said in a recent economic bulletin.

“On the other hand, internal frenzy brought about by the elections are seen to stabilize by the second half of the year,” he added.

Beltran did not say whether the poll results will have any impact. Beltran has not responded to calls and messages as of press time.

Current investor qualms follow a trend similar to previous presidential elections in 2010, The STAR reported last Monday. Analysts have also said global news affected sentiment.

Before this, however, net inflow of foreign portfolio investments amounted to $482 million in March, up from $57 million in February.

A net inflow of portfolio placements – also called hot money for the ease they enter and exit markets – indicate more investments came in than left. Net outflow signifies vice-versa.

Beltran said investors were more focused on news abroad that was tracked by local developments then.

“This reflects positive investor sentiment after the BSP’s announcement to keep policy rates,” he said.

“(This is also a result of) Fed’s announcement to lessen interest rate hike to two instead of four,” Beltran said.

Last March 24, the Bangko Sentral ng Pilipinas (BSP) kept its policy rates for a 12th straight meeting arguing healthy domestic demand and low inflation for easier credit.

This followed a US Federal Reserve meeting the week before where the central bank signaled it may not hike rates as planned this year.