More ‘hot money’ flees RP in April

MANILA, Philippines – Portfolio investments or “hot money” registered with the Bangko Sentral ng Pilipinas (BSP) showed a net outflow of $276.1 million in April, reversing a net inflow of $32.2 million in March as investors fled the market after the government admitted overshooting its deficit target amid declining revenues.

“Investors cashed in on gains on previous month’s investments in listed shares and government securities,” said BSP Governor Amando M. Tetangco Jr.

According to Tetangco, investors naturally preferred to be liquid following the release of the official government data showing that the programmed deficit for the first quarter of 2009 had been breached.

However, Tetangco said risk aversion also went beyond the fiscal concerns because of the persistent instability of the global economy and even the threat of the H1N1 virus.

BSP data showed that over $435.3 million worth of registered foreign portfolio investments flowed into the country in April, but withdrawals were overwhelming, totalling $711.4 million.

The BSP reported that 63 percent of the gross inflow or $275.5 million were invested in listed shares and 37 percent or $159.8 million went to peso denominated government securities (peso GS).

Outflows, on the other hand, resulted from the withdrawal of investments from interim peso deposits or IPDs($521.2 million or 73 percent) and remittances of dividends from listed shares ($136.1 million or 19 percent).

For the first four months of this year, the BSP report showed that the April withdrawals brought to $221.3 million the total outflow which was actually lower than the net outflow of $287.3 in the same period in 2008.  

From January to April, the BSP said gross investment inflows totalled nearly $1.7 billion, 58 percent lower than the almost $4 billion posted last year.

Investments in listed shares of $1.1 billion (77 percent of which went to telecommunication, mining, property and holding firms) comprised 63 percent of the total and were 55 percent lower than the $2.3 billion level in 2008.

Similarly, the BSP said investments in peso GS of $583.9 million (34 percent of total) and peso bank deposits with minimum maturity of 90 days amounting to $0.8 million (less than one percent of total) dropped by 45 percent (from $1.1 billion) and over 99 percent (from $545.8 million), respectively.

Meanwhile, placements in money market instruments rose by $46.2 million for a three percent share of the total inflows.

The BSP said the United States, the United Kingdom, Singapore and the Netherlands were the top investor countries and collectively contributed 81 percent of total investment funds during the period. –Des Ferriols, Philippine star