Portfolio inflows slow down to $1.8B

The first seven months saw portfolio inflows, also known as “hot” money, slowing down by 31 percent to only $1.833 billion versus year-ago inflows of $2.666 billion.

Gross inflows during the period roughly approximated last year’s volume but the gross outflows accelerated from $7.826 billion to $8.569 billion this year.

In July alone, portfolio transactions showed that $823 million out of the net inflows of $962.75 million was plunked down in the purchase of stocks traded daily at the Philippine Stock Exchange.

According to the Bangko Sentral ng Pilipinas (BSP), $175 million was also spent on the purchase of peso-denominated government securities.

The net inflows in July followed the net outflows the previous June when $7.69 million worth of foreign funds flew out of the country.

According to the BSP, the inflows in July were more than three times the $302-million net inflows recorded a year ago.

Registered investments of $2.2 billion were 77.4 percent and 59.9 percent higher than the level in June 2012 and July 2011 due to block sales of Ayala Corp., Ayala Land Inc. and Puregold Price Club Inc. shares, as well as Banco de Oro’s stock-rights offering, it said.

The BSP added that the outflows were almost the same level as the previous June at $1.2 billion due to profit-taking and continuing concerns on global developments.

It said the listed stocks that attracted the most foreign funds were bank shares, which received a total
$411 million worth of portfolio fund support.

Real-estate companies also attracted $373 million in July while holding firms drew in another $322 million.

Diversified services firms were the recipients of $151 million, while telecommunications companies benefited with portfolio investments of another $145 million.

BSP Governor Amando M. Tetangco Jr. acknowledged these are the very same foreign capital flows requiring close monitoring because of their impact on domestic liquidity and the pressure on inflation such flows represent.

“Capital flows can come in at a fast pace so we look at how it is absorbed in the economy because liquidity may be affected, it can create asset price bubbles, among other effects,” Tetangco said.

Earlier, the BSP increased the capital charge on so-called non-deliverable forwards, or NDFs, the nature of which, the regulators said, has increasingly become more speculative rather than as a hedge against volatile factors in the market.

Tetangco would also later tweak the regulations to ensure foreign fund participation was excluded from the BSP special deposit account window consistent with the broad aim of limiting the appreciation of the local currency the peso. –Jun Vallecera / Reporter, Businessmirror