Net hot money down anew

FOREIGN PORTFOLIO investments remained strong in March but profit taking pulled the net result down for a second straight month, the Bangko Sentral ng Pilipinas (BSP) yesterday reported.

A total of $2.334 billion was placed in local stocks and bonds but investors also withdrew $2.729 billion, for a net outflow of $395.14 million last month.

Foreign portfolio investments — also called “hot money” for the ease by which these can enter and leave the market — hit a net inflow of $1.27 billion in January but petered to a net $211.65 million the following month.

March’s $2.334-billion inflow was up 10.1% from February. It brought registered investments for the quarter to $7.26 billion, 79.1% higher from a year earlier, which the central bank said was due to investor optimism as the Philippines continued to outperform on the economic front.

Local corporations posted strong earnings performances, it added, and the country also bagged its first-ever investment grade credit rating from Fitch. The relaxation of foreign ownership rules provided another spur to the March result, the BSP said.

The inflows went mainly to equities listed in the Philippine Stock Exchange (PSE), to the tune of $2 billion. Peso-denominated government securities accounted for $351 million, while peso-denominated time deposits added $18 million.

The main beneficiaries of hot money in the PSE were holding firms ($510 million), property developers ($454 million), banks ($333 million), telcos ($185 million), and food, beverage and tobacco companies ($183 million).

The strong influx, however was offset by heavy outflows “due mainly to profit-taking as well as continuing concerns about the euro zone,” the BSP said.

March’s net outflow trimmed the first quarter result to net $1.087 billion, still more than double the $464.45 million a year earlier.

The BSP expects hot money to post a net inflow of $3.8 billion this year. It hit $3.885 billion last year, breaching the $3.2-billion forecast. –Businessworld