June ‘hot money’ inflows rise 41.6% to $2.8B


Foreign portfolio investments to the Philippines, also known as “hot money,” further rose to reach $2.8 billion in June this year.

In a statement, the Bangko Sentral ng Pilipinas (BSP) on Thursday announced that hot money in June was 41.6 percent higher than the $2-billion level recorded in May.

The BSP attributed the growth to the heightened interest in peso government securities (GS), from $150 million last month to $787 million in June.

“The transactions in May 2013 were a knee jerk reaction of investors to the pronouncement of the US Federal Reserve, and considered a healthy market correction after surges in inflows, particularly in April this year,” it stated.

The central bank said that it expected the return of funds to emerging markets to start in June this year. Year-on-year, registered investments more than doubled to $2.8 billion, or by 133.9 percent from $1.2 billion in 2012, it added.

Investments during the month were in Philippine Stock Exchange (PSE)-listed securities, $2 billion, or 70.9 percent; peso GS, $787 million, or 27.7 percent; and peso time deposits, $40 million, or 1.4 percent.

The BSP noted that the main beneficiaries of investments in PSE-listed shares include holding firms, $889 million; banks, $270 million; property firms, $219 million; food, beverage and tobacco companies, $207 million; and telecommunication firms, $140 million.

Similarly, outflows also rose to $2.9 billion in June, higher by 8.2 percent from the $2.6 billion in May. The BSP attributed the growth to massive sell-offs triggered by news on the possible scaling down of the US Federal Reserve’s quantitative easing program within the year.

Transactions in PSE-listed securities and peso GS resulted in net outflows of $541 million and $492 million, respectively, while peso time deposits netted outflows of $27 million.

The United Kingdom, United States, Luxembourg, Singapore and Hong Kong were the top five investor countries for the month, whose combined shares accounted for 80.4 percent.

The US continued to be the main beneficiary of outflows from investments receiving $2.3 billion

“Registration of inward foreign investments with the Bangko Sentral ng Pilipinas is voluntary. It entitles the investor or his representative to buy foreign exchange from authorized agent banks and/or their subsidiary/affiliate foreign exchange corporations for repatriation of capital and remittance of dividends/profits/earnings that accrue on the registered investment,” the BSP said.


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