Net hot money inflow surges in Oct

MANILA, Philippines - Foreign portfolio investments surged in October amid the country’s rosy economic prospects, the Bangko Sentral ng Pilipinas (BSP) said yesterday.

Net hot money inflows ballooned to $969.33 million in October from only $40.16 million in the same period last year.

Foreign portfolio investments are also called hot money given the ease with which the funds enter and exit economies.

Gross inflows during the month climbed 62 percent to $2.50 billion from $1.54 billion, while gross outflows increased two percent to $1.53 billion from $1.50 billion.

“Registered investments rose... due to the third upgrade of the country’s credit rating, this time by Moody’s Investors

 Service (and the) improved economic growth outlook for the Philippines by the Asian Development Bank,” the central bank said.

At the same time, the US government decision to end the 16-day partial shutdown and avert a debt default also contributed to the rise in hot money inflows.

The bulk or 52.6 percent of hot money inflows in October went to Philippine Stock Exchange-listed securities, while 44 percent were invested in peso-denominated government securities. Another 3.4 percent, meanwhile, found their way into peso-denominated time deposits.

The BSP noted that for funds invested in the PSE, these benefitted mainly holding firms; food, beverage and tobacco firms; banks; property companies; and telecommunication firms.

The top five investor countries last month were the United Kingdom, Singapore, the US, Luxembourg, and the Netherlands.

The US, meanwhile, continued to be the main beneficiary of hot money outflows.

In the first 10 months of the year, net hot money inflows amounted to $3.66 billion, up 36 percent from the $2.69 billion recorded in the same period last year.

Gross inflows during the 10-month period jumped 64 percent to $24.24 billion from $14.74 billion, while gross outflows went up 71 percent to $20.58 billion from $12.05 billion.