‘Hot money’ flows hit 7-month high

Global investors continued to believe in the Philippine growth story as purchases of Philippine listed shares and debt securities rose to a seven-month high in November despite the possible impact of Supertyphoon “Yolanda” on the economy.

Documents released by the Bangko Sentral ng Pilipinas (BSP) showed that net inflows of foreign portfolio investments or “hot money” rose to its highest level since April this year.

“(This was) in spite of fears over the economic impact of Super typhoon ‘Yolanda’ and renewed concerns on the possible scaling down of the quantitative easing program in the United States,” the central bank reported.

Net inflows in November reached $980.94 million, better than the $969.33 million the month before. The November figure was also the highest since the $1.13 billion in net inflows that came in last April.

For the 11 months to November, portfolio investments reached $4.58 billion—better than last year’s $3.69 billion.

Hot money flows are foreign investments in listed shares, corporate bonds and government securities. Investments in these securities are an indication of foreign investors’ perception of the Philippines, at least in the short term.

The BSP noted that the increase in flows in November was driven by bargain-hunting and investor optimism “fueled by the third-quarter gross domestic product growth of 7 percent.”

The Philippine economy has grown by an average 7.4 percent in the first three quarters of the year, making it the fastest-growing market among major Southeast Asian countries. The government is on track to meeting its growth target for the economy of 6 to 7 percent this year.

Bulk of the investments in November went to publicly listed shares, accounting for 80.5 percent. These investments went mainly to the retail, gaming, property and financial sectors, the BSP said.

Investments in peso-denominated government securities made up 15.8 percent, while time deposits contributed 3.7 percent.

The main sources of foreign investments were the United Kingdom, United States, Singapore, Hong Kong and Netherlands. Together, these five countries made up 78.3 percent of all investments.