Net hot money inflow hits $1.9B

Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said foreign portfolio investments, otherwise known as "hot money," continue to flow into the country.

Tetangco said from January to July 22 this year, BSP-registered foreign portfolio inflows reached $3.96 billion against total outflows of $2.06 billion, resulting in a net inflow of $1.9 billion.

This is a substantial improvement from the $140.4-million net inflow recorded in the same period last year.

The bulk of the inflows went into PSE-listed securities at $2.75 billion, followed by government securities at $1.19 billion, bank deposits at $16.3 million and money market placements at $7.1 million.

However, for the week ending July 22, the movement of portfolio investments resulted in a net outlow of $13.8 million compared to net outlow of $12.9 million in the same period last year.

Tetangco noted that there were less inflows from GS and at the same time there were some sales of GS by foreign investors.

For the period July 1-22, inflows reached $397.3 million while outflows stood at $346.4 million, resulting in a net inflow of $50.9 million. This is a big improvement from a net outflow of $13 million in the same period in 2004.

Hot money refers to foreign funds invested on a short-term basis in stocks, bonds, money market instruments.

The figures were based on data gathered from the country’s five largest custodian banks – ING Bank, Citibank, HSBC, Standard Chartered Bank and Deutsche Bank.