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Hot money posted net inflow of $40m in February — BSP

Foreign portfolio investments or “hot money” posted a net inflow of $40 million in February, compared to the $340-million net inflow a year ago, as investors became wary of the global economic impact of the coronavirus disease 2019, the Bangko Sentral ng Pilipinas said Friday.

The February net inflow was a reversal of the $486-million net outflow in January 2020. This brought hot money in the first two months to a net outflow of $446 million, a steep reversal of the $1.15-billion net inflow recorded in the same period last year.

“Developments for the month included the ongoing concern on the potential global economic impact of the coronavirus disease outbreak, and release of 2019 corporate earnings report of several listed firms,” the BSP said in a statement.

About 68.7 percent of investments registered in February were in Philippine Stock Exchange-listed securities while the remaining 31.3 percent went to investments in peso government securities.

The United Kingdom, Singapore, the United States, Luxembourg and Japan were the top five investor countries in February, with combined share of 72.8 percent.

Registration of inward foreign investments with the Bangko Sentral ng Pilipinas is optional under the liberalized rules on foreign exchange transactions.  

Portfolio investments are also called “hot money” because of the ease they are invested in and taken out of the domestic financial markets.

Global and domestic uncertainties compelled foreign fund managers to pull out their investments from the local financial markets last year.

Hot money last year posted a net outflow of $1.9 billion in 2019, a turnaround from the $1.2-billion net inflow in 2018. Julito G. Rada

Total inflows last year reached $16.6 billion, up from $16.03 billion in 2018, while total outflows climbed to $18.5 billion from $14.82 billion.

The BSP expects hot money to post a net inflow of $8.2 billion in 2020.

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