‘Hot money’ inflows more than doubled in Jan.


Foreign portfolio investments more than doubled in January 2013 as fund owners were encouraged by news that the Philippines could get an investment grade this year, monetary officials said.

Foreign portfolio investments more than doubled in January as fund owners were encouraged by news that the Philippines could get an investment grade this year, according to monetary officials.

Data from the Bangko Sentral ng Pilipinas showed that the gross inflow of foreign portfolio investments reached $2.8 billion in the first month of the year—more than twice the $1.2 billion registered in the same period of 2012.

In terms of net inflow, which is gross inflow less the outflows, foreign hot money hit $1.27 billion—more than double the $586 million recorded a year ago.

Purchases of stocks, government securities and corporate bonds formed the bulk of foreign portfolio investments in the Philippines.

The surge in foreign “hot money” also pushed the Philippine Stock Exchange Index to record highs early this year. BSP officials said the figures indicated that foreign capital flows would remain robust throughout the year.

The Philippines, along with other emerging markets in Asia, drew more foreign capital away from the United States and parts of Europe because of the lingering problems of the industrialized countries, said BSP Assistant Governor Ma. Cyd Tuaño-Amador.

Foreign funds are also pulled toward emerging markets like the Philippines because of their favorable economic performance, she added.

This development presents “considerable challenges,” such as “liquidity management and maintenance of stability in the country’s financial markets,” Amador said.

The BSP welcomes foreign portfolio investments because the funds help boost activity in the country’s capital markets. But the central bank also said that if the surge in foreign portfolio investments could not be properly managed, it could threaten the economy by accelerating inflation and heightening the volatility of the exchange rate.

This is why the BSP is constantly monitoring foreign capital inflows and is prepared to implement policy adjustments when necessary, Amador said.

The BSP “will continue to deal with the challenge,” Amador said. “We have a deep policy toolkit in responding to a surge in capital flows.”

Last month, the BSP put a cap on banks’ holdings of non-deliverable forwards (NDFs) to curb foreign capital inflows. NDFs are hedging instruments, which could also be used to generate income through speculation on the peso.

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  • mamamiamia

    Love it mga Amiga!  It’s more to come!  Love you Philippines!

  • rodben

    My brother try to invest some 10k in stock market the broker said he gain twice then suddenly all his money was loss in just a minute…the broker said sorry sir ….but I have offer to you…so in so…It’s better to have fix salary abroad..

  • rodben

    Stock Market is for the manipulators specially election time the losers are those less knowledge and small capital investors….like a gambling…after election the flow of stock markets will back to normal then rise again in the coming 2016 elections….the BIG QUESTIONS ” HOW ABOUT THE MILLIONS POOR PINOYS…are they still eat twice day or nothing….by the it’s Noy2 admin style…hope their is changes on the next administrations…pagnamatay kyo makikinabang mga kumpare or kumare nyo lang mga EJO..

  • tower_of_power

    Most of those going into stock market are benefiting from insider information … look at ONGPIN … laway lang ang capital …. he earned tons of money … of course with the help of corrupt bank officials and sec personalities… look at calata … look at other IPOs … sino sino ba ang kumita sa mga eto? This is hardly economics … this is not gambling even … this is CORRUPTION … A SCAM victimizing uninformed or misinformed greedy stock investors …. hahahaha!!!!

    Ika namnam mix!!!

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