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Foreign portfolio investments rebounded to a net inflow of $107m in November–BSP

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Foreign portfolio investments or ‘hot money’ registered a net inflow of $107 million in November, a reversal of the $607-million net outflow seen a year ago, as investors cheered the mostly positive third-quarter corporate earnings, the Bangko Sentral ng Pilipinas said.

“This may be attributed to positive investor reaction to news of favorable third-quarter corporate earnings;  outcome of and pronouncements during the recently concluded 31st Asean Summit; and the Senate’s approval of a higher personal income tax exemption of P250,000.00 annually, as part of the Senate version of the government’s tax reform program,” the Bangko Sentral said.

Foreign portfolio investments are overseas funds that are temporarily invested in local stocks, government securities and money market. They are also called ‘hot money’ because of the ease they are invested in and taken out of the local markets.

The November net inflow was a turnaround from the $563.42-million net outflow recorded in October. Despite the latest data, hot money in the first 11 months still recorded a net outflow of $634.53 million, a reversal of the $672.73-million net inflow in the same period last year.

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Data showed that total inflows in November fell to $1.128 billion from $1.190 billion a year ago, while gross outflows also declined to $1.020 billion from $1.797 billion.

About 80.8 percent of these funds in November went to securities listed on the Philippine Stock Exchange, particularly in holding firms, banks, food, beverage and tobacco companies, property companies and utilities.

The 19.2-percent balance went to peso government securities whose transactions yielded a net inflow of $213 million. 

The United States, the United Kingdom, Singapore, Norway and Luxembourg were the top five sources of investments in November.

Registration of inward foreign investments with the Bangko Sentral is optional.

Portfolio investments posted a net inflow of $404 million in 2016.  This year, the Bangko Sentral expects hot money to post a net outflow of $2.5 billion.

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