Hot money hits $407 M in Sept

MANILA, Philippines - New monetary stimulus unveiled in developed markets last September drove investor confidence in risky assets such as portfolio investments in the Philippines, which soared 172 percent last month, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Also called “hot money” for the ease they enter and exit economies, portfolio investments posted a net inflow of $407.42 million in September, more than double the previous year’s $150.05 million.

The result was “due to encouraging news about the European Central Bank’s plan to buy bonds of distressed euro zone economies and Spain’s announced cuts to its budget as well as the United States Federal Reserve’s third round of bond purchases,” a statement from the BSP said.

Despite the increase last month, hot money went down by nearly 30 percent as of the third quarter, registering a net inflow of $2.628 billion against previous year’s $3.210 billion, data showed.

Broken down, gross inflows amounted to $13.171 million, while gross outflows reached $10.542 million, data showed.

Most hot money went to listed shares at the Philippine Stock Exchange (PSE), BSP said.

“The main beneficiaries of investments in PSE-listed shares were: food, beverage and tobacco manufacturers ($317 million), holding firms ($220 million), banks ($155 million), property companies ($120 million) and telecommunication firms ($106 million),” the statement said.

Majority of inflows came from the United Kingdom, the United States, Hong Kong, Singapore and Luxembourg. The US continued to be the main destination for outflows, it added.

BSP is set to release next month revised balance of payments (BOP) projections, which include that of portfolio investments. As of now however, BSP still sees a net inflow of $4.5 billion this year, slightly up from last year’s $4.077 billion.

Hot money forms part of the country’s BOP, which measures our capacity to settle obligations and meet external requirements.