Local markets awash in ‘hot money’

Foreign money flooded local financial markets in September as foreign investors came back to the country, attracted by the economy’s stability and healthy fundamentals.

This came about after the US Federal Reserve decided to defer the tapering of its bond-buying program, enabling fund managers to tap massive amounts of cheap money.

The Bangko Sentral ng Pilipinas (BSP) attributed the inflow of foreign portfolio investments, also known as “hot” money, to the “resurgence of investor confidence due to positive economic data from China and the easing tension between the United States and Syria.”

Foreign portfolio investment reached a net inflow of $682.73 million for the month of September, a turnaround from net outflows of $441.56 million the month before.

Gross inflows for the month reached $2.6 billion, more than double the $1.11 billion the same month last year. These inflows were partially offset by $1.919 billion in divestments in September.

As of the first week of October, year-to-date net inflows reached $2.806 billion, higher than the $2.653 billion the same week last year.

In August, investments in publicly listed shares reached $1.8 billion, about 70 percent of the total. Investments in peso-denominated government securities totaled $714 million, or 27.5 percent, while peso time deposits reached $52 million, accounting for 2 percent.

The biggest recipients of foreign capital among listed companies were holding firms, banks, property companies, IT firms, and public utilities.—Paolo G. Montecillo