Net hot money inflows surge 40% in Apr

Net foreign portfolio investments or hot money inflows surged by 40 percent to $243.10 million in April from $173.21 million in March, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

The BSP said reports of solid 2006 earnings of several blue chip companies and positive macroeconomic developments further boosted investor sentiment during the month in review. 

According to BSP Governor Amando M. Tetangco Jr., gross foreign portfolio investments in April amounted to $931.76 million with the bulk, or 80 percent, accounted by shares listed at the Philippine Stock Exchange (PSE).

According to Tetangco, stock market investments went mainly to telecommunications and property firms—both consistent performers in the daily trades. 

On the other hand, placements in peso-denominated government securities, primarily Fixed Rate Treasury Notes or FXTNs, accounted for 20 percent with $183.57 million.

Tetangco said that based on BSP data, these inflows more than offset capital repatriations/outflows of $688.66 million in April, broken down into several portions.

The outflow of portfolio investments was traced to divestments from PSE-listed shares amounting to $348.88 million which accounted for 51 percent of total outflows.

The rest were due to divestment of government securities amounting to S$68.46 million, (10 percent of total outflows); withdrawals of money market placements that amounted to $0.08 million; and peso deposits  of $271.24 million, which had a combined 39-percent share.

Overall, Tetangco said there was marked investor optimism as the country’s inflation rate further decelerated to a 20-year low of 2.2 percent in March while the peso continued to appreciate against the dollar.

In the first four months of the year, newly registered foreign portfolio investments and capital outflows totaled $4.446 billion and $3.365 billion, respectively, for a net inflow of $1.081 billion. 

This net inflow was 83 percent more than the $592-million net inflow in the same period in 2006. 

Gross investment inflows, which rose by 127 percent from the year-ago level of $1.960 billion, went primarily to PSE-listed shares of $3.551 billion (80 percent of total).

Investments in peso-denominated government securities, mostly FXTNs, accounted for 18 percent, while investments in money market instruments and peso bank deposits had a combined share of two percent. 

Tetangco said these investments were funded by fresh inward remittances of foreign exchange converted into peso through banks operating in the Philippines.