‘Hot money’ starts coming back
Investors have started to return to the Philippines in droves after a blip in June that saw foreign money leave the country amid fears over the end of easy money policies in the United States.
Documents from the Bangko Sentral ng Pilipinas (BSP) released this week showed that there was a net inflow of $489.68 million in foreign investments in local stocks, bonds and government securities in the first week of July.
This was a reversal from the $497 million that left the country in the second, third and last weeks of June, coinciding with the US Federal Reserve’s announcement of a planned tapering of its $85-billion bond-buying program.
The planned end to the US Fed’s program followed stronger signs of a recovery in the world’s largest economy, prompting investors to pull out of emerging markets like the Philippines to return to the traditional safe haven, the United States.
The net inflows in the first week of July were also the highest recorded since the third week of April this year when net inflows reached $885.83 million.
BSP Deputy Governor Diwa C. Guinigundo had said that the fundamentals of the Philippine economy made the country an attractive investment destination for fund managers, regardless of external conditions.
“Foreign portfolio investments remain strong,” Guinigundo said, noting that the net inflow as of the first week of July, at $2.04 billion, was 67-percent higher than the $1.2 billion in net inflows that entered the country at the end of the same period last year.
The Philippines had Asia’s fastest-growing economy in the first quarter of the year, expanding 7.8 percent in January to March to beat most analysts’ expectations and outpacing the region’s growth driver China.
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