Hot money net inflows continue in August

The recovery of so-called hot money investments into the country’s financial markets continued for a second consecutive month at the end of August due largely to good quarterly earnings reported by local publicly-listed firms, according to the central bank.

In a press statement, the Bangko Sentral ng Pilipinas revealed that net inflows of portfolio investments reached $225.85 million in last month, which was a significant improvement over the $53.29 million net inflows in July and the $516.12 million in outflows for June.

Since the beginning of the year, local financial markets have so far recorded net inflows of $602.01 million, in sharp contrast with the $318.88 million in net outflows during the same eight-month period last year.

“This may be attributed to investors’ reaction to good second quarter corporate earnings results, the forthcoming infrastructure initiatives of the government, and the recent resumption of trade talks between the US and China which all lifted market sentiments,” the central bank said.

Registered investments for the month of August alone amounted to $1.1 billion, reflecting a 16.9-percent improvement from the $959 million figure in July. Likewise, a 19.7 percent year-on-year growth may be noted from the $936 million level recorded during the previous year.

The United Kingdom, US, Singapore, Hong Kong, and Luxembourg were the top five investor economies for the month, with combined share to total at 80.5 percent.

About 79.9 percent of investments registered during the month were in listed securities in the Philippine Stock Exchange, pertaining mainly to property companies, holding firms, banks, food, beverage and tobacco firms, and telecommunication companies. The balance of 19.4 percent went mostly to peso-denominated government securities, while the remaining amount went to other peso-denominated debt instruments and peso time deposits.

Net inflows were noted for transactions in PSE-listed securities ($39 million), government securities ($180 million), corporate bonds ($6 million) and time deposits (less than $1 million).

Outflows for the month ($895 million) were lower by 1.2 percent and 9.9 percent, respectively, compared to those recorded in July 2018 ($906 million) and August 2017 ($994 million). The US continued to be the main destination of outflows, receiving 81.5 percent of total remittances.

Registration of inward foreign investments with the BSP is optional under the liberalized rules on foreign exchange transactions.