Foreign portfolio investments or “hot money” posted a net inflow of $774.18 million as of mid-March, a reversal of the net outflow of $252.34 million a year ago, data from the Bangko Sentral ng Pilipinas show.
Latest data from the Bangko Sentral showed that gross inflows since the start of the year hit $4.252 billion, while gross outflows reached $3.478 billion.
The Bangko Sentral said portfolio investments in the first week of March posted a net inflow of $1.178 billion, and a net outflow of $20.98 million in the following week.
Foreign portfolio investments are also called “hot money” because of the ease they are invested in and taken out of the domestic stock and money markets.
Foreign fund managers withdrew their investments from the domestic financial markets in February on profit taking and in reaction to the possibility the US Federal Reserve would further increase interest rates.
Foreign portfolio investments posted a net outflow of $545 million in February, a reversal of the $162-million net inflow in January. It was also higher than the $409-million net outflow a year ago.
The Bangko Sentral said the withdrawals could be attributed to “profit taking as well as investor reaction to news of possible rate increases by the US Federal Reserve due to an expected surge in inflation amidst implementation of the US government’s tax cuts.”
Total inflows in February reached $1.028 billion, up from $981 million a year ago, while gross outflows hit $1.573 billion, higher than the $1.39-billion outflows in the same period last year.
About 81 percent of investments in February were in securities listed in the Philippine Stock Exchange, pertaining mainly to holding, firms, property companies, banks, food, beverage and tobacco firms, and casinos and gaming companies. The 19-percent balance went to peso government securities.
The United Kingdom, the US, Malaysia, Hong Kong, Luxembourg, and Singapore were the top six investor countries in February with a combined share of 85.1 percent.
Registration of inward foreign investments with the Bangko Sentral is optional under the liberalized rules on foreign exchange transactions.
The issuance of a BSP registration document entitles the investor or his representative to buy foreign exchange from authorized agent banks and/or their subsidiary/affiliate foreign exchange corporations for repatriation of capital and remittance of earnings that accrue on the registered investment.
Hot money posted a net outflow of $205 million in 2017, as the total withdrawals of $16.267 billion offset the gross inflows of $16.062 billion amid global uncertainties such as geopolitical concerns and the anticipation on the next policy moves of the US Federal Reserve.
The Bangko Sentral expects hot money to post a net outflow of $900 million in 2018.