‘Hot money’ five times more by the end of August — BSP data

FOREIGN PORTFOLIO investments — referred to as “hot money” for the ease with which they enter and exit local markets — grew more than five times in the eight months to August, final data the central bank released yesterday showed.

Specifically, hot money posted a net inflow of $960.27 million as of Aug. 31, compared to just $182.18 million in the same eight months last year. Fund inflows in that period grew 43% to $5.881 billion from $4.024 billion, outstripping the 25% increase in outflows to $4.921 billion from $3.842 billion in the same comparative periods.

Placements in shares listed at the Philippine Stock Exchange rose 32.26% to $4.1 billion from the $3.1 billion recorded in the same eight months in 2009. Those funds were invested in listed banks (24%), property companies (20%), telecommunication firms (19%), holding firms (17%) and utility firms (11%), the statement read further.

The United States, the United Kingdom, Singapore, Malaysia and Luxemborg were the top five sources of these investments, accounting for 83% of the total.

For August alone, net inflow totaled $225.06 million, more than 15 times the $14 million recorded the previous month and a reversal of the $82.91 million net outflow seen in August 2009. Fund inflows for that month alone doubled to $787.9 million from $384.96 million the previous year, while outflows grew by a slower 20% to $562.84 million from $467.87 million.

Preliminary data also showed hot money starting September with a net inflow.

Specifically, Sept. 1-4 saw a $34.32-million net inflow, a reversal of the $9.69 million net outflow seen in the same period last year. Inflows grew 35.8% to $114.18 million, while outflows dropped 14.8% to $79.87 million. –Businessworld