More ‘hot money’ coming back to PH; investors hunt for bargains

The first week of October saw more “hot money” that came in than pulled out, reversing five straight weeks of net outflows, Bangko Sentral ng Pilipinas data released Thursday showed.

During the week of Oct. 3-7, the foreign portfolio investment inflow of $331.5 million exceeded the $289.7-million outflow, resulting in a $41.8-million net inflow.

“Bargain hunters came back to the fore after the messy September that saw all weeks in the red.  One other shift in sentiment was triggered by dissipating fears over the Deutsche Bank fine, rumored to be levied by the US Justice Department,” Bank of the Philippine Islands associate economist Nicholas Antonio T. Mapa explained.

“Apart from that, sentiment remained very fragile given hawkish Fed commentary, rising domestic inflation and US jobs data reported on Oct. 7,” Mapa added.

As such, the year-to-date net inflow stood at $1.31 billion as the $14.08-billion inflows were more than the $12.77-billion outflows, a reversal of the $275.2-million net outflow posted a year ago.

In September, the net outflow of hot money hit a 32-month high amid profit-taking among foreign investors coupled with less new investments due to a deadly blast in the President’s hometown as well as external uncertainty.

Last month, the Philippines posted a $807.2-million net outflow in foreign portfolio investment, the highest since January 2014’s net outflow of $1.8 billion.

“September was a particularly challenging month because people thought that the US Fed would adjust monetary policy, so there was a lot of uncertainty and global financial markets proved to be more volatile,” BSP Deputy Governor Diwa C. Guinigundo earlier explained. —Ben O. de Vera