Hot money reverts to $57-M net inflow


NET foreign portfolio investments posted inflows in February, reversing the outflows recorded in January but significantly lower year-on-year, the Bangko Sentral ng Pilipinas reported on Friday.

February’s net hot money inflow of $57.74 million reversed the $129.85 million recorded in January, the central bank said. A year earlier, the country saw foreign portfolio investments hit a net inflow of $1.190 billion.

Total inflows rose to $1.068 billion from January’s $820.40 million but eased from the $2.549 billion posted a year earlier.

Total outflows, meanwhile, rose to $1.011 billion from $950.25 million the previous month but lower than February 2015’s $1.359 billion.

Focusing on the month-on-month growth of total outflows, the central bank in a statement said this is due to “profit taking, lingering concerns on the slowdown of the Chinese economy, and oil price uncertainties.”

Most of the registered inflows, or 77.1 percent, went to Philippine Stock Exchange-listed firms. The funds were used to purchase shares in holding firms, food/beverage/tobacco firms, property developers, banks, and telecommunications companies.

Another 22.9 percent went to peso govern ment securities (GS).

PSE-listed securities recorded a net outflow of $57 million, while peso GS yielded net inflows of $115 million.

The United Kingdom, Singapore, the United States, Luxembourg and Belgium were the top five investor countries for the month with a combined share of 79.5 percent.

The US was the main destination of outflows, accounting for 89.6 percent of the total.
Also called hot money because of the ease by which the funds enter and leave the country, foreign portfolio investments are invested in Philippine financial assets and do not necessarily create jobs, unlike foreign direct investments that are put into assets such as factories and equipment.

Hot money yielded a net outflow of $599.70 million last year, exceeding the central bank’s forecast of $200 million.

A larger net outflow of $1.3 billion is expected for 2016 given uncertainties surrounding China, other emerging markets, as well as the next moves of the US Federal Reserve.


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