Hot money inflow rises to $450.9 M

MANILA, Philippines - The Philippines recorded a net inflow of foreign portfolio investments or hot money on the back of the country’s sound macroeconomic fundamentals, as well as the commitment made by the new administration to pursue the economic reforms undertaken by the previous administration.

The Bangko Sentral ng Pilipinas (BSP) reported yesterday the country booked a net inflow of $450.87 million in June, a reversal of the $521.99 million net outflow recorded in June last year.

Last month’s net inflow of foreign portfolio investments was also higher than the $72.81 million net inflow registered last May.

Foreign portfolio investments or hot money are referred to as speculative funds controlled by investors who actively seek short-term returns and high interest rate investment opportunities.

Inflows rose 7.1 percent to $1.81 billion in June from $1.69 billion in June last year due to large inflows in shares of a universal bank as well as sustained interest in peso-denominated government securities.

Japan’s largest financial institution the Bank of Tokyo Mitsubishi UFJ Ltd (BTMU) pumped in P37 billion in exchange for a 20 percent stake in Security Bank Corp.

The Philippines booked a second straight month in net inflow of foreign portfolio investments after President Rodrigo Duterte emerged as the clear winner of the peaceful elections last May 9.

The Duterte administration has laid down its 10-point agenda anchored on the reforms undertaken by the previous administrations.

On the other, the central bank said outflows plunged 38.4 percent to $1.36 billion in June from $2.21 billion in the same period last year.

For the first half, the BSP said the net inflow of hot money slipped 9.1 percent to $580 million from $638.38 million in the same period last year.

The BSP said the country still managed to book a net inflow of foreign portfolio investments despite profit taking by investors, concerns about the slowdown of the Chinese economy, and the continued softening of oil prices in the world market.

Inflows fell 29.8 percent to $8.45 billion from January to June versus the $12.04 billion in the same period last year that included large inflows for stock rights offering by two holding companies, two universal banks, and a property firm.

The bulk or 83.8 percent of the investments registered in June were in companies listed at the Philippine Stock Exchange (PSE), while the remaining 15.7 percent went into peso-denominated government securities.

The BSP reported that transactions in PSE-listed companies booked a net inflow of $260 million while peso-denominated debt papers yielded a net inflow of $80 million.

Major sources of foreign portfolio investments are the United Kingdom, US, Singapore, Hong Kong, and Luxemburg.