MANILA, Philippines — Foreign portfolio investments or hot money continued to flow into the Philippines on the back of the country’s sound macroeconomic fundamentals, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.
The country booked a net inflow of foreign portfolio investments for the second straight month in April with $279.28 million, more than five times the $51.49 million recorded in the same month last year.
Foreign portfolio investments are also called hot or speculative money because of their flighty nature.
BSP officer-in-charge Diwa Guinigundo had said the country’s strong macroeconomic fundamentals continue to attract investments, both foreign direct investments and foreign portfolio investments, tempering the outflows brought about by the tightening of monetary policy in the US and Europe.
“There are too many balls in the air. One of which is the expected normalization of monetary policy both in the US and Europe that could temper capital flows to emerging markets including the Philippines,” he said.
The Development Budget Coordination Committee (DBCC) expects the economy to grow between seven and eight percent this year.
“I think the continued strength of the Philippine economy, particularly the output and the government’s program toward infrastructure, which would attract not only foreign direct investments but also portfolio investment can also provide support to higher portfolio investments,” Guinigundo said.
Inflows rose by 4.1 percent to $1.37 billion from $1.32 billion. About 82.2 percent were invested in securities mainly banks, holding firms, property companies, food, beverage and tobacco firms, and retail companies being traded at the Philippine Stock Exchange (PSE).
The balance of 17.8 percent went to peso government securities.
The central bank said the bulk of the investments came from the United Kingdom, the US, Hong Kong, Singapore, and Luxembourg.
On the other hand, outflows fell by 13.6 percent to $1.09 billion in April from $1.27 billion in the same month last year. The bulk or 74.5 percent of total outflows went to the US.
For the first four months, the country enjoyed a net inflow of $1.2 billion, reversing the net outflow of $644 million in the same period last year.
Inflows surged by 34.4 percent to $6.83 billion from January to April compared to $5.08 billion in the same period last year, while outflows slipped 1.7 percent to $5.62 billion from $5.72 billion.