Hot money back in April

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HOT money flow, or the movement of portfolio investments in and out of the country, showed a net inflow of $324.75 million in April, reversing the previous month’s net outflow, on optimism about the prospects of the local economy.

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“The net inflows arose from investor optimism about the economy’s growth and strong quarterly corporate results, ignoring the possibility of a further cut in the United States Federal Reserve’s quantitative easing program,” the central bank said.

The central bank was referring to any further reductions in the bond-buying program of the US Federal Open Market Committee to stimulate the US economy, similar to the decision in March for a third monthly $10 billion cut in its bond purchases since December, pulling the program down to $55 billion from $85 billion.

Data from the Bangko Sentral ng Pilipinas (BSP) showed that the investment transactions in April reversed the $91.51 million net outflow recorded in March, but still fell far short of the $1.13 billion net inflow the country recorded a year earlier.

Total hot money outflows in April ebbed to $1.55 billion from $2.22 billion in March.
Inflows were recorded at $1.87 billion, which, although reflecting a 12.1-percent decline from the previous month’s $2.13 billion level, still exceeded the total outflows in April.

About 76.7 percent of the investment that came in went to securities listed on the Philippine Stock Exchange (PSE), such as holding firms, property, banks, telecommunications, and utilities firms, while 23.3 percent was invested in peso government securities (GS).

Transactions in PSE-listed securities in April yielded a net inflow of $217 million,
higher than the March figure of $153 million. Peso GS also recorded a net inflow of $112 million, in contrast to last month’s net outflow of $231 million.

In peso time deposits, the outflows continued but at a much weaker pace in April, registering a net outflow of $5 million, compared with a net outflow of $14 million in March.

“The United States, Singapore, the United Kingdom, Malaysia, and Luxembourg were the top five investor countries for the month, with a combined 78.8 percent share of the total, while the US continued to be the main destination of outflows, receiving 80 percent of the total,” the BSP said.

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