Hot money returned in January with a net inflow of $301m

Foreign portfolio investments, or ‘hot money,’ returned to the Philippines in January 2017 with a net inflow of $301 million, a reversal from the net outflow of $130 million a year ago, amid a positive outlook on the economy.

Data from Bangko Sentral ng Pilipinas showed the net inflow in January this year also reversed the $315-million net outflow recorded in December 2016.

“This may be attributed to optimism about the New Year and positive investor reaction to the announced 6.6-percent GDP growth of the country in the fourth quarter of 2016,” Bangko Sentral said in a statement. 

The gross domestic product expanded 6.6 percent in the fourth quarter and 6.8 percent in the whole of 2016, near the upper bound of the government’s target range of 6 percent to 7 percent.

Foreign funds helped boost the stock market in January, with the 30-company benchmark index rising 5.7 percent in the first months of the year.

Gross inflows in January rose to $1.147 billion from $820 million a year ago, while total outflows declined to $845.83 million from $950 million.

About 95.4 percent of investments in January were placed in securities listed in the Philippine Stock Exchange involving banks, holding firms, property companies, food, beverage and tobacco firms and utilities companies.  About 3.4 percent were investments in peso government securities and 1.2 percent went to other peso debt instruments.

Transactions for peso GS and peso time deposits resulted in net outflows of $42 million and $31 million, respectively, while net inflows were realized for other instruments.

The United Kingdom, the United States, Singapore, Luxembourg and Hong Kong were the top sources of hot money last month.

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.

Portfolio investments posted a net inflow of $354 million last year, a reversal of the $599.69-million net outflow in 2015. 

Topics: Foreign portfolio investments , hot money , net inflow , Bangko Sentral ng Pilipinas , BSP
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