BSP reports $97.92 M in net hot money inflows in Jan.

Published February 26, 2021, 4:04 PM

by Lee C. Chipongian

The Bangko Sentral ng Pilipinas (BSP) registered $97.92-million of net foreign portfolio investments inflows in January, reversing December 2020’s $523.86 million net outflows.

 The latest “hot money” net inflows also reversed the $486.10 million net outflows in January 2020.

The BSP said inflows for the first month of the year grossed $951.61 million while gross outflows totaled $853.70 million. Both figures are lower compared to same time in 2020 of $1.084 billion and $1.607 billion, respectively.

 Foreign portfolio investments are invested in listed companies, peso-denominated government securities, peso time deposits with banks and other peso debt instruments. These hot moneys are also invested in unit investment trust funds and other portfolio investments such as Exchange Traded Funds and Philippine Depositary Receipts.

 The BSP said about 62.1 percent of investments registered were in listed securities at the Philippine Stock Exchange, such as in banks, holding firms, property companies, food, beverage and tobacco companies and transportation services firms.

 Another 37.9 percent were invested in peso government securities.

 For the month of January, investors from the United Kingdom, Singapore, the US, Luxembourg and Hong Kong contributed 83.4 percent of hot money flows. However the US continue to account for most of the total outflows or about 71.7 percent.

 According to the BSP, market developments that influenced foreign fund flows include: the storming of the US Capitol resulting in several deaths and injuries lasy January 6; and the confirmation of Joseph R. Biden as the 46th president of the US.

 Investors were also affected by the following: reports confirming the local transmission of the new COVID-19 variant; emergency use authorization granted by the Food and Drug Administration for two COVID-19 vaccines along with other vaccine rollout policies; and investor reaction to the country’s investment grade rating from Fitch Ratings of “BBB” with a stable  outlook, said the BSP.

For the full-year 2020, the Philippines had a net hot money outflows of $4.24 billion due to the pandemic, this was bigger than BSP’s projection of $2.8 billion.

For this year, the BSP forecasts better with a recovering global economy. It is projecting foreign fund inflows to recover back to a net inflow of $3.5 billion this year.