February sees ‘hot money’ net inflows

MANILA, Philippines — Foreign portfolio investments — also known as “hot money” for their volatility — came into the Philippines in February, the Bangko Sentral ng Pilipinas reported Thursday.

Last month saw net inflows of $340 million, lower than $763 million recorded in January but a reversal from $529 million net outflows posted a year ago.

In a statement, the BSP attributed the net inflows in February to “investor optimism arising from developments on trade negotiations between the US and China and the passage of the tariffication law, which is expected to help boost the rice supply in the country and thereby temper inflation.”

So-called hot money enters and exits the country with ease, unlike firmer commitments like foreign direct investments.

Foreign investors placed a total of $1.4 billion short-term bets in February, 31.6 percent lower than $2.1 billion recorded in the preceding month but 34.9 percent bigger than $1 billion posted in the same period a year ago.

“About 77.4 percent of investments registered during the month were in PSE-listed securities (pertaining mainly to banks, holding firms, property companies, food, beverage and tobacco companies, and transportation companies); while 22.4 percent went to Peso government securities and the 0.2 percent balance went to other Peso debt instruments,” the central bank said.

Meanwhile, $1.1 billion foreign funds left in February, with the United States — which received 80.3 percent of total remittances — continuing to be the main destination of outflows.

According to the BSP, the United Kingdom, the United States, Singapore, Luxembourg and Norway were the top five investor countries for the month, with combined share to total at 67 percent.