Net hot money inflow up in June

MANILA, Philippines - Foreign portfolio investments in the Philippines registered a net inflow of $43.95 million in June, a reversal of the net outflow of $84.91 million in the same period last year, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

This is the third consecutive month the country saw a net inflow of hot money as funds are finding their way back into emerging countries amid an improving market sentiment.

Gross inflows during the month fell 40 percent to $1.67 billion, while gross outflows were also down by 43 percent to $1.62 billion.

About three-fourths of the inflow were invested into Philippine Stock Exchange-listed securities, which are primarily holding firms; banks; property companies; food, beverage and tobacco firms; and telecommunication companies.

The remaining 24.7 percent went into peso-denominated government securities, the BSP said.

 “The United Kingdom, the United States, Singapore, Malaysia and Luxembourg were the top five investor countries for the month, with combined share to total of 81.4 percent,” the central bank said.

The United States remained the main destination of outflows during the month.

For the first half of the year, foreign portfolio investments amounted  to a net outflow of $1.38 billion, a reversal of the $1.49 billion net inflow in the same period last year.

Gross inflows during the six-month period went down 33 percent to $10.41 billion, while gross outflows also decreased 16 percent to $11.79 billion.

The central bank expects net hot money inflows to reach $1.5 billion this year, 64 percent lower than last year’s $4.22 billion.

BSP Governor Amando M. Tetangco Jr. said the country may experience higher hot money outflows due to “bouts of volatility” in global financial markets.

According to Tetangco markets have exhibited a calm behavior as there is less macroeconomic uncertainty globally, leading to an improving market sentiment.