Net hot money inflow hits $398M in January-February

Net hot money inflow hits $398.3 million in the first two months of the year as investor sentiment proved more resilient than expected despite alleged attempts at a military takeover that put the country in a state of emergency.

The Bangko Sentral ng Pilipinas (BSP) reported yesterday that total hot money inflows from abroad reached $755.7 million in February alone, bringing the year-to-date total to $986.1 million.

The BSP said about $855.1 million of total hot money flows went into stocks listed at the Philippine Stock Exchange (PSE) which accounted for 87 percent of total inflows for the first two months of the year.

Placements in peso-denominated government securities, on the other hand, accounted for 13 percent, worth $131 million.

These investments, according to the BSP, were funded with new inward remittances of foreign exchange converted into pesos through banks operating in the Philippines.

By country of origin, the BSP reported that the bulk or 64 percent of the new registered investments came from the United States, United Kingdom and Singapore.

Compared to the same period last year, foreign investments in PSE-listed securities rose by 13 percent while investments in peso-denominated government securities fell by 73 percent.

The BSP said there was an "unusually large investment" in government securities of $166.8 million for the week ending Jan. 21, reflecting foreign investors’ reaction to the reported lower-than-expected 2004 fiscal deficit and the appreciating trend of the peso.

Meanwhile, capital repatriations/outflows pertaining to BSP-registered investments amounted to $587.8 million during the same two-month period this year.

The BSP said divestments in government securities comprised $254.6 million or 43 percent of the total while securities listed in the Philippine Stock Exchange (PSE) accounted for 43 percent or $249.6 million.

On the other hand, withdrawals of peso deposits represented 14 percent of total outflows, equivalent to $83.6 million.

Peso deposits withdrawn for outward remittance mainly represented proceeds of earlier divestments from PSE-listed shares and government securities, the BSP explained.