Net hot money inflows hit $763M in January

Published February 15, 2019, 12:00 AM

by manilabulletin_admin

By Lee C. Chipongian

The central bank reported that in January, foreign portfolio investment net inflows reached $763 million, higher than same period in 2018 of $162 million and from $278 million in December.

Bangko Sentral ng Pilipinas (BSP) logo

The Bangko Sentral ng Pilipinas (BSP) said the higher net “hot money” inflows was due to continued investor optimism.

“Investor optimism (came) from the easing trade tension between the US and China and the decline in inflation alongside the increase in net foreign buying in PSE-listed (Philippine Stock Exchange) shares in January 2019,” said the BSP in a statement late Thursday.

About $506 million of hot money net inflows were invested in PSE-listed securities while $256 million and less than $1 million were placed in peso government securities and peso time deposits, respectively. The BSP recorded a $1 million net outflows in other peso debt instruments during the month.

In the meantime, the total registered foreign portfolio investments amounted to $2.1 billion in January, up by 30.5 percent from $1.6 billion inflows in the previous month. On a year-on-year basis, inflows increased by 27 percent.

The BSP said around 71.6 percent were invested in PSE-listed securities such as in holding firms, property companies, banks, food, beverage and tobacco companies, and retail companies.

About 28.4 percent were placed in peso government securities and peso time deposits. These investments came from investors located in the United Kingdom, the US, Singapore, Norway, and Hong Kong, accounting for 74.7 percent.

Outflows for January, on the other hand, totaled $1.29 billion which was 0.2 percent down from December’s $1.30 billion. On a year-on-year basis, outflows were lower by 11.1 percent from $1.50 billion. Some 78.4 percent of the outflows were withdrawn by US investors.

The BSP projects net outflows of $200 million in 2019. Hot money flows are considered highly speculative funds.

In 2018, hot money net inflows was at $1.2 billion, reversing the $195 million net ouflows in 2017. This was also better than what the BSP projected of $100 million net outflow.
The central bank said investors remained optimistic throughout 2018 because of the passage of the first phase of the government’s tax reform program in January 2018.