Net hot money inflow down 25% in 10 mos

MANILA, Philippines - Profit taking caused a slow down in foreign portfolio investments in October, 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 $40.16 million in October, down 83 percent from last year’s $237.44 million.

This brought the year-to-date tally to $2.663 billion from January to October decreasing 25 percent from $3.593B year-ago levels, BSP data showed.

Broken down, gross inflows amounted to $14.709 billion, while gross outflows reached $12.045 billion.

“The net inflow were much lower than those recorded last month and a year ago as profit taking triggered heavy sell-offs in the PSE-listed securities,” BSP said in a statement. This indicates that investors sold shares in order to lock in gains from a bullish equity market.

The Philippine Stock Exchange (PSE), which closed down 0.67 percent to 5,414.820 yesterday, has hit a total of 25 record-highs for the year.

“The main beneficiaries of investments in PSE-listed shares were: holding firms ($354 million), telecommunication companies ($176 million), banks ($161 million), property companies ($133 million) and utility firms ($80 million),” the central bank said.

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

BSP has forecast a hot money net inflow of $4.5 billion this year, slightly up from last year’s $4.077 billion. The outlook however will be revised this month.

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