$51M net hot money entered PH in April


FOREIGN portfolio investment yielded a net position of $51.49 million in April, compared with a net outflow $459.86 million in March and $354.05 million in April 2016, the Bangko Sentral ng Pilipinas (BSP) reported on Friday.

The BSP said total inflow reached $1.320 billion last month, up 3.6 percent from $1.273 billion a year earlier, but down 3.9 percent from $1.373 billion in March

Central bank data showed the total outflow of $1.268 billion in April was down 22.1 percent from $1.627 billion a year earlier and by 30.8 percent from $1.833 billion last March.

“This development may be attributed to investor reaction to the World Bank’s view that the Philippines will continue to be a top performer in the region, coupled with positive sentiment in anticipation of the country’s strong gross domestic product number for the first quarter of 2017,” the BSP said.

Land Bank of the Philippines market economist Guian Angelo Dumalagan said the country also benefitted from geopolitical tensions that affected financial markets.

“As investors diverted their attention back to the country’s strong macroeconomic fundamentals amid geopolitical concerns abroad involving the US against North Korea, Syria and Afghanistan,” he said.

“In April, investors were also expecting strong Philippine GDP growth in the first quarter, following the upbeat forecasts of various institutions,” he added.

In the first four months of the year, however, the payments

The BSP said international developments such as the United States air strike against Syria and higher interest rates in the US influenced investment flows into the Philippines.

In the first four months of the year, hot money registered a net outflow of $516.04 million, reversing the $56.26 million net inflow posted a year earlier.

“Outflows more than offset inflows due to caution ahead of the first rate hike of the US Federal Reserve this year,” Dumalagan noted.

In the four months to April 2017, foreign portfolio investment amounted to $4.82 billion while outflows totaled $5.33 billion.

Dumalagan said sees more outflows this year, with the US central bank generally expected to hike interest rates one more time before the year ends, with markets investors expecting a rate adjustment happening in June 2017.

BSP data showed 67.8 percent of hot money was invested in Philippine Stock Exchange-listed securities, mainly in holding firms, banks, property companies, food, beverage and tobacco firms and telecommunications companies. The balance went into peso government securities and peso debt instruments.

Singapore, United Kingdom, United States, Malaysia, and Hong Kong were the top five investor countries, with a combined share-to-total of 81.7 percent. The United States continued to be the main destination of outflows, receiving 75.7 percent of total remittances.

Foreign portfolio investment is also called hot money because of the ease with which the funds move in and out of a country. The investment does not necessarily create jobs, unlike foreign direct investments, which are used to build factories and buy capital equipment.


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