‘Hot money’ inflows up 245% to $687 million in first half

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) said yesterday net inflow of foreign portfolio investments surged 245 percent in the first half of the year as investors gobbled up more government securities and pumped in more money into the local equities markets.

Data released by the central bank yesterday showed that foreign portfolio investments or “hot money” posted a net inflow of $687 million from January to June this year or $415.26 million higher than the net inflow of $199.22 million registered in the same period last year.

This after inflows went up by 39.5 percent to $4.354 billion in the first semester of the year from $3.121 billion in the same period last year.

The BSP attributed the expansion to the 27 percent increase in the investments in shares of stocks listed in the Philippine Stock Exchange (PSE) to $3 billion as well as the 38 percent rise in investments in government securities to $995 million.

Likewise, statistics showed a significant rise in investments in peso time deposits to $385 million in the first half of the year.

Monetary authorities attributed the steady flow of foreign portfolio investments into the country to the stable financial markets, robust corporate earnings, strong peso,the rise in US stock market as well as bouyant Asian markets and the stronger-than-expected gross domestic product growth of 7.3 percent in the first quarter of the year.

On the other hand, gross foreign portfolio investment outflows went up by 25.5 percent to $3.668 billion from January to June compared to $2.921 billion in the same period last year.

For the month of June alone foreign portfolio investments posted a net outflow of $85.84 million from a net outflow of $77.09 million registered in the same month last year.

Portfolio investment inflows surged by 79.5 percent to $809.36 million last month from $450.82 million in the same month last year while outflows went up by 69.5 percent to $895.19 million from $527.91 million.

“This resulted from investor concern on the Eurozone problem, the negative economic outlook in the US and China, compounded by the government’s deficit of P162.1 billion for the first five months of the year,” the BSP said. –Lawrence Agcaoli (The Philippine Star)