Hot money inflows hit $79M in June


    MORE foreign portfolio investment flowed into the Philippines in June, but the total was not enough to pull the year-to-date total from a negative position, data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday showed.

    A net inflow of $79.56 million in foreign portfolio investments — or hot money — entered the country in June, the biggest since it registered a net inflow of $301.33 million in January, the BSP numbers showed.

    In May, the Bangko Sentral noted that there was a net outflow of $24.35 million compared with $450.87 million a year earlier.

    Total inflows amounted to $2.01 billion in June, up 35.8 percent from $1.48 billion in May and by 11.4 percent from $1.80 billion in June 2016.

    “This may be attributed to positive investor sentiment relative to the anticipated resolution of the conflict in Marawi City, accelerated net foreign buying, and approval by Congress of the first tax reform package,” central bank said.

    The government is confident that the battle for Marawi will soon be over, with no less than President Rodrigo Duterte saying that the conflict will end in 10 to 15 days.

    The first package of the Comprehensive Tax Reform Program, which was incorporated with 53 other tax-related bills under the proposed Tax Reform for Acceleration and Inclusion Act, was approved by the House of Representatives on May 31.

    Total outflows last month reached $1.93 billion, up 28.3 percent from $1.5 billion in May “due to profit- taking and investor reaction to the United States Federal Reserve’s decision to increase interest rates,” the BSP said.

    The same trend was noted on a yearly basis, as outflows rose by 42.5 percent from $1.48 billion, it added.

    In the first half of the year, hot money registered a net outflow of $460.83 billion, reversing the $593.87 million in net inflow a year earlier “due to certain domestic and international developments, such as the US air strike against Syria, global terrorist attacks, interest rate increases by the US Federal Reserve, political turmoil in the US, and the closure order for several mining companies in the country,” the central bank said.

    Data showed that 82 percent of hot money was invested in securities listed on the Philippine Stock Exchange, mainly in holding firms, property companies, telecommunications firms, banks, and utilities companies; 17.2 percent went to peso government securities (GS); and 0.8 percent was placed in other peso debt instruments (OPDIs).

    “Transactions in PSE-listed securities and OPDIs yielded net inflows of $311 million and $16 million, respectively, while investments in peso GS resulted in net outflows of $247 million,” the BSP said.

    The United States, United Kingdom, Singapore, Malaysia and Luxembourg were the top five investor-countries in the Philippines, with a combined share-to-total of 80.1 percent. The United States again accounted for the largest amount of repatriated funds, totaling 64.7 percent of the money transfers from the Philippines.

    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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