‘Hot money’ flowed into PHL for second straight month

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FOREIGN investors continued to place “hot money” in the Philippines in February, as the latest data from the Bangko Sentral ng Pilipinas (BSP) showed sustained foreign portfolio investments (FPI) net inflow for the month.

FPI for February hit a net inflow of $339.57 million, as speculative capital that flowed into the country exceeded total outflows during the month. The magnitude, however, is lower compared to the $762.82-million net inflows in the previous month.

BSP data also showed that the February figure is a reversal of the $528.53-million net outflow recorded a year ago.

FPI are known as “hot” or “speculative” money because these are easily pulled in and out of the local platforms in the slight change of global and local sentiment.

This type of foreign investment is usually a measure of the global economy’s investing sentiment for the Philippines in short-term
prospects for yields, in contrast to foreign direct investments, which are investments placed in the Philippines in search of long-term yield.

The BSP said the positive sentiment may be attributed to investor optimism arising from developments on trade negotiations between the United States and China, and the passage of the rice trade liberalization law, which is expected to help boost the country’s rice supply and temper inflation.

It was in February when the Philippine Statistics Authority announced that inflation went down further in January and talks about being “back-to-target” by the end of the first quarter of the year started circulating.

The peso also performed better in February, averaging at P52.19 to a dollar from the previous month’s P52.468.

The BSP said about 77.4 percent of investments registered during the month were in PSE-listed securities — pertaining mainly to banks, holding firms, property companies, food, beverage and tobacco companies, and transportation companies.

Meanwhile, the other 22.4 percent went to Peso government securities and the 0.2 percent balance went to other Peso debt instruments.

The BSP said the United Kingdom, the US, Singapore, Luxembourg, and Norway were the top 5 investor countries for the month, with combined share to total at 67 percent.

Total outflows for the month were lower compared to figures recorded for January 2019 by 17.6 percent. The US continued to be the main destination of outflows, receiving 80.3 percent of total remittances. For the first two months of the year, net FPI inflows amounted to $1.151 billion, up from the $811.78 million net inflows in same period last year.