Hot money inflow rises

Net “hot money” inflows rose to $450.9 million in June, reversing net outflows a year ago, Bangko Sentral ng Pilipinas (BSP) data released Thursday showed.

Last June, $1.8 billion in foreign portfolio investments flowed in—the highest inflows since April last year’s $1.9 billion, outpacing the $1.4-billion worth that left the country.

In a statement, the BSP explained that the steady hot money inflows came from the “shares of a universal bank and sustained interest in peso government securities (GS).”

The net inflows in June reversed the net outflows of almost $522 million a year ago, and were higher than the $72.8-million net inflows a month ago.

Foreign portfolio investments are in the form of placements in publicly listed shares, government and private sector IOUs, as well as deposit certificates.

Portfolio investments are considered short-term bets—hence the nickname hot money—because these placements may be pulled out quickly.

At the end of the first half, foreign portfolio investments posted net inflows worth $580 million “despite profit-taking, concerns about the slowdown of the Chinese economy, and the decline in global oil prices,” the BSP noted.

In June alone, 83.8 percent of registered investments were in Philippine Stock Exchange (PSE)-listed securities (mostly banks; beverage, food and tobacco companies; holding firms; property companies; and telecommunication firms); 15.7 percent in peso GS; and the remaining 0.5 percent in other peso debt instruments (OPDIs) and peso time deposits (TDs).

“Transactions in all investment instruments yielded net inflows: PSE-listed securities ($260 million); peso GS ($181 million); OPDIs ($9 million); and peso TDs (less than $1 million),” the BSP said.

The top five sources of hot money last June were Hong Kong, Luxembourg, Singapore, the United Kingdom and the United States, which accounted for more than four-fifths of the total.

Meanwhile, “the US continued to be the main destination of outflows, receiving 84.2 percent of total remittances,” the BSP added. Ben O. de Vera