‘Hot money’ continues surging into September — BSP data

NET FOREIGN PORTFOLIO investment inflows grew six times as of Sept. 24, latest available central bank data showed.

Specifically, these investments — also known as “hot money” for the ease with which they enter and exit local markets — posted a net inflow of $1.333 billion as of Sept. 24, six times bigger than the $217.02 million recorded in the comparable period last year.

In the same periods, gross inflows rose by nearly half to $6.924 billion from $4.617 billion, while outflows grew by a slower 27.08% to $5.591 billion from $4.4 billion.

In the week of Sept. 20-26, hot money posted a net inflow of $140.72 million, or nearly a tenth more than the $128.01 million recorded in the comparable period last year.

Gross inflows in that week totaled $470.49 million, up 37.76%, year on year, from $341.54 million, while outflows grew by a faster 54.44% to $329.77 million from $213.53 million.

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo noted via text last weekend that the hot money surge forms “part of large foreign exchange flows to emerging markets. Push factors include heavy liquidity and low interest rates in advanced countries and, therefore, higher risk appetite. Pull factors include good macro fundamentals in emerging markets, good output and stable inflation outlook.”

BSP Assistant Governor Cyd Tuaño-Amador said separately that “we are seeing stronger inflows into both the stock market and the bond market…as foreign funds are attracted to invest in the Philippines primarily due to favorable macroeconomic fundamentals and also as they search for yields.” –Businessworld