Net ‘hot money’ inflow hit six-month high of $206.47M in July

The Bangko Sentral ng Pilipinas yesterday reported a net “hot money” inflow of $206.47 million in July, the highest in six months, partly on the back of investors’ positive reaction to the President’s report on his first year in office.

BSP data showed that the $1.434-billion inflow of foreign portfolio investment exceeded the $1.228-billion outflow, resulting in a net inflow for the second straight month.

The net inflow in July was the biggest since January’s $301.33 million. The July figure, however, was dwarfed by the $1.067-billion net inflow in the same month last year.

The July inflow was also lower by 36.8 percent year-on-year and 28.9 percent month-on-month.

Hot money outflow, meanwhile, rose 2.1 percent year-on-year but declined 36.8 percent month-on-month.

The BSP attributed the higher inflows of foreign portfolio investment last month to “positive investor sentiment on news of inflation declining to 2.8 percent in June from 3.1 percent in May; strong net foreign buying; investor reaction to President Duterte’s second State of the Nation Address, and the US Federal Reserve’s decision to maintain interest rates.”

Of the registered investments in July, 90.5 percent were in Philippine Stock Exchange-listed securities (mostly banks, food, beverage and tobacco firms, holding companies, property firms as well as utilities), while the rest were invested in peso government securities, the BSP said.

“Transactions in PSE-listed securities yielded net inflows of $224 million, while investments in peso government securities resulted in net outflows of $18 million” that month, the BSP added.

In July, the top five sources of hot money were Luxembourg, Singapore, Switzerland, the United Kingdom and the United States with 82.6 percent combined share to the total.

The US remained the top destination of hot money outflows, cornering 86.1 percent of the total.

From Jan. 2 to Aug. 4, foreign portfolio investment records showed a net outflow of $204.24 million, a reversal of the $1.744-billion net inflow a year ago, which the BSP blamed on the following: “the US air strike against Syria, global terrorist attacks, interest rate increase by the US Federal Reserve, political turmoil in the US, and the closure order for several mining companies in the country.”

In June, the BSP retained its projection of a $900-million net outflow of portfolio investment by end-2017, more than double the $404.43 million posted in 2016.