THE Philippines proved to be an attractive destination for short-term foreign investments, as foreign portfolio investments (FPI) returned to the inflow territory in 2018, according to the latest data from the Bangko Sentral ng Pilipinas (BSP).
Figures from the BSP showed that FPI to the country hit a net inflow of $1.204 billion by the end of last year. This is a stark reversal from the $194.5 million in net outflows seen at the end of 2017.
FPI are known as “hot” or “speculative” money because they are easily pulled in and out of the local platforms should there be slight changes in global and local sentiment.
This type of foreign investment is usually a measure of the global economy’s investing sentiment to the Philippines in short-term prospects for yields, in contrast to foreign direct investments (FDI), which are placed in the Philippines in the search for long-term yield.
Hot money investments during the year came mostly to the country’s stock market, as 71.4 percent went to listed companies. Philippine government securities were the second destination of hot money inflows during the year with 20.2 percent of the total during the period, while other peso debt instruments got the remaining 8.3 percent.
The BSP said the bulk of the hot money investments during the year were seen flowing into the Philippines in the first quarter of the year.
“This may be attributed to the large investment in a holding company registered this year accompanied by investors’ optimism over the passage of the first phase of the government’s tax reform program,” the BSP said in a statement on Thursday.
It was in March when the FPI recorded a net inflow of $1.132 billion, owing largely to a billion-dollar inflow in the first week of the month.
The BSP said the United Kingdom, the United States, Singapore, Netherlands and Hong Kong were the top 5 investor-countries during the year. These countries accounted for a combined share to total of 72.8 percent.
The US continued to be the main destination of outflows, receiving 78.8 percent of the total.
In December alone, FPI hit a net inflow of $278.11 million, as the total $1.58-billion total inflow was enough to cover for the $1.3-billion total outflows for the month.