• INFLOW 619.24% HIGHER THAN MAY

    Hot money surges to $450.87M in June

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    Net foreign portfolio investments in the Philippines surged to more than $450 million in June, boosted mainly by the issuance and sale of additional shares in Security Bank and inflows to government securities (GS).

    Data from the Bangko Sentral ng Pilipinas (BSP) on Thursday showed that hot money registered a $450.87 million net inflow in June.

    The June inflow was more than six times the $72.81 million net inflow registered in May,
    and reversed the $521.99 million net outflow recorded a year earlier.

    Total inflows thickened to $1.80 billion from $1.78 billion the previous month and from $1.69 billion in June 2015.

    Total outflows, meanwhile, fell to $1.35 billion from May’s $1.71 billion and dropped from the $2.21 billion posted a year earlier.

    The central bank said the net inflows in June were mainly due to “large inflows in shares of a commercial bank and sustained interest in peso GS.”

    Last month, Security Bank listed new shares issued to Japanese banking giant Bank of Tokyo-Mitsubishi UFJ Ltd. (BTMU), which the latter earlier bought for P36.9 billion.

    The Dy-led bank said that it listed 150.707 million in new common shares in the name of BTMU.

    The listing brought Security Bank’s total listed stock to more than 753.54 million common shares.

    H1 inflow down

    Cumulative figures for transactions during the first half of the year yielded a net inflow of $593.87 million, lower than the $737.58 million net inflow seen in the same period last year.

    Six-month inflows of $8.5 billion offset outflows of $7.91 billion, the BSP said.

    The BSP pointed out the positive inflow occurred despite “profit-taking, concerns about the slowdown of the Chinese economy, and the decline in global oil prices.”

    Components

    Most of the registered inflows, or 83.8 percent, went to Philippine Stock Exchange-listed firms. The funds were used to purchase shares in holding firms, property developers, banks, food/beverage/tobacco firms, and telecommunications companies.

    Another 15.7 percent went to peso government securities (GS). The balanced went to other peso debt instruments (OPDIs) and peso time deposits (TDs).

    Transactions in all instruments yielded net inflows: PSE-listed securities ($260 million), peso GS ($181 million), OPDIs ($9 million), and TDs (less than $1 million).

    The United Kingdom, the United States, Singapore, Hong Kong, and Luxembourg were the top five investor-countries for the month, with a combined share of 80.8 percent.

    The US was the main destination of outflows, accounting for 84.2 percent of the total remittances.

    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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