Hot money inflow hits 3-year high in March

Foreign portfolio investments swung to a net inflow of $1.13 billion in March, the highest in more than three years, after the government successfully raised P12 billion ($230 million) from the maiden issuance of Panda bonds, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

The latest figure was the highest since the country registered a net inflow of $1.19 billion in February 2015 and a complete reversal of the $545.14 million net outflow recorded a month earlier.

Foreign portfolio investment inflows more than doubled to $2.47 billion in March from $1.03 billion in February. The amount was nearly 80 percent higher than the $1.37 billion recorded in the same month last year.

The BSP said about half of the investment inflows went to other peso debt instruments, while 41 percent went to listed securities at the Philippine Stock Exchange (PSE) particularly holding companies, property developers, food, beverage, and tobacco firms, and utility providers.

The remaining 8.5 percent went to government securities.

Foreign portfolio investments are also called hot or speculative money because of its flighty nature.

The central bank said investors from the Netherlands, the United Kingdom, the US, Norway, and Hong Kong accounted for 85 percent of the total inflows.

Last March, Chinese and other offshore investors swarmed the renminbi-denominated bond offering of the government with oversubscription hitting about 6.32 times, the all-time largest coverage for any renminbi – denominated sovereign issuer.

Bids reached 9.22 billion renminbi compared to the Philippine government’s debt offering of 1.46 billion renminbi.

The BSP said outflows declined 15.1 prcent to $1.34 billion in March from $1.57 billion in February. The outflow of hot money in March was also 27.1 percent lower compared to the $1.83 billion recorded in the same month last year.

The BSP said net inflows amounted to $1.2 billion for other peso debt instruments and $122 million for peso government securities in March.

Transactions for PSE-listed securities recorded a net outflow of $240 million in March. The PSE index has since corrected after hitting a record high of 9,058.62 points last Jan. 29.

For the first quarter, the Philippines booked a net inflow of foreign portfolio investments of $749.43 million, reversing the $567.53 million net outflow in the same quarter last year.