‘Hot money’ net inflow hit $4.2B in ’13

Foreign investments in listed shares and debt securities of local companies rose last year despite improving conditions in advanced economies, which prompted most investors to put their capital back in countries like the United States.

Data released by the Bangko Sentral ng Pilipinas (BSP) showed that, throughout 2013, foreign portfolio investments, or “hot money,” stood at a net inflow of $4.2 billion. This represents a growth of 8 percent year-on-year.

The final figure for 2013 was also better than the $3.2 billion in inflows projected by the BSP. The increase came about despite the $354.33 million in net outflows recorded for December alone.

The central bank attributed the increase to various factors, including the country’s sound macroeconomic fundamentals and sustained high growth in the first three quarters.

The BSP also noted the investment grade ratings the country received from the world’s top credit watchdogs in 2013, “which helped sustain investor confidence in the Philippines.”

Data showed that gross investments reached a record high of P28.4 billion—the highest since 1999—outpacing the $18.5 billion posted in 2012.

“There was a steady stream of investment inflows of more than $2 billion a month, except in the ghost month of August, believed to be unlucky for business, and in December due to the announcement of the forthcoming tapering of the US quantitative easing program,” the BSP said.

Investments in shares listed on the Philippine Stock Exchange made up 74.7 percent of all hot money inflows for the year. Investments in peso-denominated government securities made up 23 percent, time deposits cornered 2 percent, while peso-denominated debt instruments contributed 0.3 percent.

For investments in stocks, the bulk went to holding firms, banks, property companies, food, beverage and tobacco companies, and telecommunications firms.

The top countries that invested in the Philippines were the United Kingdom, the United States, Singapore, Luxembourg and Hong Kong, which collectively accounted for 83.5 percent of the total.