Hot money swings to net inflow in Jan

MANILA, Philippines - Foreign portfolio investments swung to a net inflow in January from an outflow in the same month last year as more investors poured money in the local bourse, the Bangko Sentral ng Pilipinas reported yesterday.

A net hot money inflow of $591.62 million was recorded in January, a turnaround from the net outflow of $1.844 billion in the same month in 2014.

“(This is) due to higher investments in PSE (Philippine Stock Exchange)-listed shares arising from a top-up offering of a holding corporation’s shares (and) sale of a universal bank’s and holding firm’s shares,” the central bank said.

Gokongwei-led JG Summit Holdings last month sold 145.65 million common shares and raised P8.8 billion through a top-up placement to fund its investments. Aboitiz Equity Ventures, meanwhile, sold 5.086 million treasury shares worth P276.65 million in January for its working capital and cash reserves needs.

At the same time, the BSP said the inflows were due to the “upgraded growth outlook for the country by the International Monetary Fund.”

Gross inflows of hot money rose 72 percent to $2.195 billion in January from $1.277 billion last year, while gross outflows fell 49 percent to $1.604 billion from $3.121 billion.

The net outflow recorded in January last year was due to the investors pulling out of emerging markets as the US Federal Reserve started decreasing its massive asset-buying program.

The BSP said bulk or 82 percent of the portfolio investments in January were put into PSE-listed securities. These mainly benefitted property companies, banks, holding firms, utility firms, and food, beverage and tobacco companies.

Another 17.4 percent went into peso-denominated government securities, while the remaining 0.7 percent was put in peso time deposits.

The top investor countries during the month were the United Kingdom, the United States, Singapore, Switzerland, and Luxembourg. The United States remained the main destination of outflows, the BSP noted.

Last year, hot money ended in a net outflow of $310.21 million, a reversal of the $4.22-billion net inflow in 2013. This was blamed to heightened volatility in financial markets as the US central bank decreased its monthly purchases of Treasuries and mortgage bonds, which eventually ended in October.