Hot money posts net inflow in August

MANILA, Philippines - Foreign portfolio investments, or hot money, picked up for the fifth straight month in August as it recorded a net inflow of $489.4 million, further improving from $322 million a month earlier.

In a report, the Bangko Sentral ng Pilipinas (BSP) said last month’s figures also reversed a $441.6-million net outflow a year ago.

About 66 percent of the foreign portfolio funds were invested in listed securities in the Philippine Stock Exchange (PSE), particularly holding firms, telecommunications companies, property firms, banks and utilities.

Other inflows went to peso-denominated government securities such as Treasury bills, peso-denominated time deposits, and other peso debt instruments.

Singapore, Malaysia, Hong Kong, the UK and the US were the top five investor countries last month with an aggregate share of 84.7 percent.

Despite the increased inflow in August, net hot money placement during the first eight months of the year, however, fell to a $566-million deficit, a marked contrast to the $1.945-billion net inflow in the same period last year.

The central bank attributed the slowdown in foreign funds’ exposure to the Philippines to the decision of the US Federal Reserve to taper its $85-billion bond-buying program since late last year, leading global investors to flock back to developed markets.

Still, the BSP said it expects hot money to recover to a net $1.5-billion inflow this year, 64 percent below  $4.22 billion in 2013.