Foreign portfolio investments or ‘hot money’ posted a net inflow of $354 million last year, surpassing the $1.1-billion net outflow target set by Bangko Sentral ng Pilipinas.
Data showed the 2016 figure also reversed the $599.69-million net outflow registered in 2015.
“Foreign portfolio investment transactions for 2016 yielded net inflows of $354 million, largely due to an initial public offering by an industrial company; investments in shares of two holding companies and a universal bank; and renewed interest in peso government securities,” Bangko Sentral said in a statement.
“This was in sharp contrast to the $600-million net outflows noted for 2015, attributed to growing concerns about the then impending interest rate adjustment in the United States and profit taking,” it said.
Foreign portfolio investments are overseas funds that are temporarily invested in local stocks, government securities and money market. These are also called hot money because of the ease they are invested in and taken out of the financial markets.
Bangko Sentral said hot money registered a net outflow of $365.49 million in December, wider than the $170.52-million net outflow recorded in same month a year ago.
Large IPOs and equity infusion kept the foreign portfolio investments positive in 2016. Cement manufacturer Cemex Holdings Philippines Inc. raised P25 billion from its maiden offering in the stock market in June.
Bank of Tokyo Mitsubishi UFJ―the biggest bank in Japan―completed its P37-billion equity investment in Security Bank Corp. in April, which was considered the biggest by a foreign financial institution in the Philippines.
Total inflows of hot money reached $17.574 billion in 2016, lower than $19.926 billion in 2015 while gross outflows dropped to $17.22 billion from $20.525 billion.
About 96.8 percent of total outflows represented capital repatriation while the remaining 3.2 percent pertained to remittance of earnings.
Transactions for securities listed in the Philippine Stock Exchange resulted in net outflows of $150 million, while net inflows were realized for all other types of instruments, such as peso government securities, $465 million; peso time deposits, $33 million; and other peso debt instruments, $6 million.
The United Kingdom, the United States, Singapore, Luxembourg, and Hong Kong were the top five investor countries last year.