POSITIVE sentiment flowed into the Philippines at the start of the year, as short-term investments made by foreign players surged in January, according to the latest data from the Bangko Sentral ng Pilipinas (BSP).
BSP data showed foreign portfolio investments (FPI) returning to the Philippines in January, as net inflow reached $762.8 million. This is 370.4 percent higher than the last year’s figure and 174.4 percent higher than inflows recorded in December.
FPI are known as “hot” or “speculative” money because they are easily pulled in and out of the local platforms in the slight change of local and international developments.
This type of foreign investment is usually a measure of the global economy’s investing sentiment toward the Philippines in short-term prospects for yields, unlike foreign direct investments, which are investments placed in the Philippines in search for long-term yield.
According to the BSP, the sentiment was up during the period due to investor optimism from the easing of the trade tension between the United States and China and the decline in inflation. The BSP also noted the increase in net foreign buying in Philippine Stock Exchange (PSE)-listed shares in January.
BSP data showed that the total outflow of $1.3 billion during the month was more than offset by the total inflows of $2.06 billion. The total foreign short-term investments placed in the country during the period was 30.5 percent higher compared to the inflows seen the previous month and about 27 percent up from last year’s figures.
Investors from the United Kingdom, the US, Singapore, Norway and Hong Kong were the top 5 investor countries for the month, with a combined share to total at 74.7 percent.
Bulk of these investments, or about 71.6 percent, were placed in the local stock market through PSE-listed securities. By sector, the hot money from foreign investors during the month were largely placed in holding firms, property companies, banks, food, beverage and tobacco companies, and retail companies.
The remaining 28.4 percent of the total hot money net flow in January went to peso government securities (GS) and peso time deposits (TDs), according to the BSP.
Aside from higher placements to the country, outflows also dropped from $1.302 billion in December 2018 and $1.5 billion in January 2018 to $1.29 billion during the period.
At end-2018, FPI hit a net inflow of $1.2 billion, as only 5 out of the 12 months during the year yielded a net outflow for short-term foreign investments.
Image credits: Nonie Reyes