‘Hot’ money net inflow falls in May

The net inflow of foreign portfolio investments, or hot money, in the Philippines during May 2012 was down 71 percent to $106.3 million from the $364.2 million in the same month last year, the Bangko Sentral ng Pilipinas has reported. ILLUSTRATION FROM TREASURY-BONDS-NOTES.COM

Foreign portfolio investments to the Philippines stood at a net inflow of $106.3 million in May—71 percent less than the $364.2 million reported in the same month last year, the Bangko Sentral ng Pilipinas said.

The BSP reported that the flow of “hot” money in May was 68 percent lower than the previous month’s level of $333.4 million due to mounting concerns over Europe’s debt problems, which could spill over to emerging markets.

In May, gross inflows reached $1.52 billion, while the amount that flowed out stood at $1.42 billion.

With last month’s figures, the net inflows from January to May reached $878.7 million—56 percent lower than the $2.01 billion reported in the same period of 2011.

However, BSP Deputy Governor Diwa C. Guinigundo said in an interview that the 2012 numbers would “catch up in due time” and match those of last year’s.

“Now, everybody is going crazy,” Guinigundo said. “[The investors] need time to digest economic and market realities.”

The Philippines, he said, has a fundamentally sound economy, a very strong balance of payments, a very stable banking system and exchange rate, and an improving fiscal condition.

“We did not experience any slowdown in 2011 and inflation is manageable and continues to come down,” Guinigundo said. “What else would they wish for?”

According to the central bank, registered investments amounted to $1.5 billion in May, or about the same level in April.

This was mainly due to several initial public offerings at the local stock market, including those of Bloomberry Resorts Corp., Rockwell Land Corp., East West Banking Corp. and Calata Corp.

Investments in shares being traded in the Philippine Stock Exchange mostly went to holding firms, which accounted for $337 million; diversified industrials, $228 million; banks, $183 million; property companies, $138 million; and telecommunications firms, $109 million.

The top five sources of foreign portfolio investments in May came from the United States, the United Kingdom, Hong Kong, Luxembourg and Singapore.

“The United States continues to be the main beneficiary of outflows from investments,” the BSP noted.