Hot money inflow surges in March

Highest in nearly a year 

MANILA, Philippines - More foreign portfolio investments or “hot money” flowed into the Philippines in March due to renewed investor interest in the country, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

BSP Governor Amando Tetangco Jr. said the country posted a net inflow of $482.43 million in March, a complete reversal of the $21.58 million net outflow in March last year.

The net inflow of foreign portfolio investments last month was also more than eight times the $57.74 million net inflow recorded in February. This was the highest since February last year.

These investments are also referred to as speculative funds controlled by investors who actively seek short-term returns and high interest rate investment opportunities.

Tetangco said net inflows jumped 58.1 percent to $1.67 billion in end-March from $1.07 billion in end-February due mainly to renewed investor interest in government securities.

He also cited the positive sentiment arising from the decision of the US Federal Reserve to reduce the number of rate hikes to two instead of four times this year as well as the decision of the BSP’s Monetary Board to keep interest rates steady.

Tetangco said the strong corporate earnings also resulted in strong inflows in March.

However, he noted last month’s inflows of hot money was lowered compared with $2.08 billion in March last year when listed banks undertook stock rights offering.

The bulk or 72 percent of the investments registered in March were in companies listed at the Philippine Stock Exchange (PSE), while the remaining 28 percent went into peso-denominated government securities.

Tetangco said transactions in PSE-listed companies recorded a net inflow of $77 million, while peso-denominated debt papers yielded a net inflow of $405 million.

Major sources of foreign portfolio investments were the US, Singapore, United Kingdom, Switzerland, and Hong Kong, accounting for almost 80 percent of the total inflows in March.

On the other hand, Tetangco reported outflows went up 9.4 percent to $1.21 billion in March from $1.01 billion in February due to profit taking.

Year-on-year, net outflows of hot money fell 42.6 percent to $1.21 billion in March from $2.1 billion in the same month last year.

The US continued to be the main destination of outflows cornering 82.3 percent of the funds that were pulled out of the Philippines.