RP posts $36-M net inflow in H1

The Philippine posted a net inflow of foreign portfolio investments or ‘hot money’ worth $36.3 million in the first half of the year, reversing the net outflow of $349.3 million during the same period last year, Bangko Sentral ng Pilipinas data show.

Portfolio investment inflows reflect the economic condition of the country, particularly the confidence expressed by foreign investors who decide on whether or not to park their funds in the country. These consist mostly of speculative funds which are parked in markets where investors expect to maximize their yields.

BSP data showed portfolio inflows for the first six months totaled $799.9 million compared to outflows of $769 million.

In contrast, inflows during the same period last year amounted to $1.76 billion compared to outflows of $2.109 billion.

The data indicates that hot money still flowed into the country even in January or at the height of the political crisis which eventually led to a change in government leadership.

During the period, inflows totaled $21.3.8 million while outflows reached $182.4 million or a total net inflow of $31.4 million.

Confidence in the new administration was restored somehow in February, but this was still not enough to calm nervous investors as outflows outpaced inflows during that period.

In February, total inflows came to $120.9 million but outflows were bigger at $134.6 million or a net outflow of $13.7 million.

The following month, the skepticism continued with inflows of $130 million being clearly outpaced by outflows of $149.4 million.

Jitters were high in April as inflows totalled only $102.4 million while outflows amounted to $121.6 million. There was some breather in the last two months though.

In May, investors were somehow assured by the decisive action taken by the government against supporters of deposed President Joseph Estrada who staged violent protests.

In June alone, foreign portfolio inflows rose to $144 million, the highest level since January this year when $213.8 million worth of funds flowed in from abroad.

However, inflows are likely to be low this month.

BSP Governor Rafael Buenaventura said yesterday the Argentinian financial crisis had caused a pullback in foreign investments in July.

"Unfortunately we have not been seeing any direct and portfolio investments coming in (in July) because of the Argentinian situation," he said.

Foreign portfolio investments are defined as purchases by non-residents of locally listed stocks, government securities and money instruments along with peso deposits funded by foreign exchange remittances. — Rocel Felix