Hot money inflow hits $385 million in first quarter

MANILA, Philippines – Foreign portfolio investments or “hot money” that entered the country surged by 602 percent in the first quarter of the year on the back of robust corporate earnings, strong peso, the rise in US stock market as well as bouyant Asian markets, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Data released by the central bank yesterday showed that foreign portfolio investments hit $384.75 million from January to March this year or seven times the $54.78 million registered in the same period last year.

Inflows went up by 31.6 percent to $1.656 billion in the first three months of the year from $1.258 billion in the same period last year. Major sources that accounted for about 83 percent of the total portfolio investments in January to March included the United Kingdom, the US, Singapore, Malaysia, and Luxembourg.

“Net inflows were boosted by the rise in US stock market as well as by the buoyant Asian markets, positive local corporate earnings turnout, and sustained appreciation of the peso against the dollar,” the BSP said in a statement.

On the other hand, gross foreign portfolio investment outflows rose by 5.65 percent to $1.271 billion in the first quarter of the year from $1.203 billion in the same period last year due to withdrawals from interim peso deposits.

For the month of March alone, foreign portfolio investments posted a net inflow of $76.04 million or more than double the $32.16-million inflow registered in the same month last year.

Portfolio investment inflows inched up by 3.6 percent to $579.72 million in March from $559.33 million in the same month last year.

Investments in shares being traded at the Philippine Stock Exchange (PSE) accounted for about 83 percent of the total inflows followed by government securities with 17 percent.

On the other hand, outflows retreated by 4.45 percent to $503.68 million in March from $527.17 million in the same month last year largely due to the withdrawals of investments divestment proceeds from interim peso deposits where the funds were temporarily deposited pending subsequent reinvestment or repatriation or remittance.

Registration of inward foreign investments with the BSP is voluntary. It entitles the investor or his representative to buy foreign exchange from authorized agent banks or their subsidiary/affiliate foreign exchange corporations for repatriation of capital and remittance of dividends/profits/earnings that accrue on the registered investment.

The Philippines shrugged off the global recession and posted a portfolio investments net inflow of $388.02 million in 2009, a complete reversal of the $1.784 billion outflow recorded in 2008.

Inflows, the BSP data showed, amounted to $6.335 billion last year or 23.8 percent lower than the $8.321 billion inflows registered in 2008 while outflows fell by 41 percent to $5.947 billion from $10.105 billion. –Lawrence Agcaoili (The Philippine Star)