BSP’s ‘hot money’ target surpassed

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Foreign portfolio investments to the Philippines, also known as “hot money,” for full-year 2013 were recorded at $4.2 billion, surpassing the revised $3.2-billion target of the Bangko Sentral ng Pilipinas (BSP) for last year.

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BSP data on Thursday showed that net foreign portfolio investments reflected an 8-percent growth from the previous year’s $3.9-billion level.

The central bank said that the growth of hot money may be attributed to the country’s sound macro-economic fundamentals; sustained high growth in the first three quarters; the investment grade ratings given to the Philippines by three international rating agencies which helped sustain investor confidence in the Philippines; and the eurozone and United States crises which diverted funds to emerging economies.

“There was a steady stream of investment inflows of more than $2 billion a month [except in the ghost month of August, believed to be unlucky for business, and in December due to the announcement of the forthcoming tapering of the United States quantitative easing program],” the BSP stated.

Central bank data showed that investments for the year consisted of Philippine Stock Exchange (PSE)-listed securities (74.7 percent), peso government securities (23.0 percent), peso time deposits (2.0 percent) and peso-denominated debt instruments (0.3 percent).

For PSE-listed securities, major beneficiaries of funds were: holding firms; banks; property companies; food, beverage and tobacco companies; and telecommunication firms.

Meanwhile, the BSP data said that total outflows for the year amounted to $24.2 billion compared to $14.6 billion in 2012.

“Outflows accelerated from March until June and in November, with the highest level recorded at $2.8 billion in June, reflecting the knee-jerk reaction of investors to the string of news on the possible tapering of the US quantitative easing program starting in late May 2013,” the BSP said.

The top five investor countries in 2013 were the United Kingdom, the United States, Singapore, Luxembourg and Hong Kong, with combined share to total at 83.5 percent.

For 2014, the central bank is seeing the inflow of foreign portfolio investments to narrow down to $2.1 billion.

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