Net ‘hot money’ inflow posted in ’16 Bangko Sentral ng Pilipinas projecting a net outflow of $900M this year

Published by reposted only Date posted on January 13, 2017

By: Ben O. de Vera, Philippine Daily Inquirer, Jan. 13, 2017

The amount of so-called “hot money” that flowed into the country last year outpaced the amount that was pulled out, resulting in net inflows of $353.59 million, the Bangko Sentral ng Pilipinas reported Thursday.

But while the end-2016 foreign portfolio investments figure reversed the $599.69-million net outflow posted in 2015, the latest BSP data showed that both the full-year inflow and outflow in 2016 were lower than the previous year’s figures.

The net inflow in 2016 came on the back of a registered inflow of $17.574 billion that exceeded the outflow of $17.221-billion.

However, the end-2016 inflow was down 11.8 percent from $19.926 billion in 2015, while last year’s hot money outflow was 16.1-percent lower than 2015’s $20.526 billion.

The BSP attributed the net inflow posted at the end of 2016 mainly to an industrial company’s initial public offering; investments in shares of a universal bank and two holdings firms; as well as the renewed investor interest in peso government securities.

The BSP noted that in 2015, foreign portfolio investment transactions yielded a net outflow due to the then increasing concerns ahead of the expected US Federal Reserve rate hike—the first in a decade, on top of profit-taking.

According to the BSP, the bulk or 82.5 percent of the registered investments last year were placed in Philippine Stock Exchange-listed securities, while 17.3 percent were in peso government securities.

Of the outflows, 96.8 percent represented capital repatriation, while the rest were remittances of earnings, the BSP said.

At the end of 2016, PSE-listed securities yielded a net outflow of $150 million, while all other types of instruments ended the year with net inflows—$465 million in peso government securities, $33 million in peso time deposits, and $6 million in other peso debt instruments.

The top sources of hot money in 2016 were Hong Kong, Luxembourg, Singapore, the United Kingdom and the US, which accounted for a combined 76.7 percent of the total. The US remained the top destination of outflows, accounting for 83.1 percent of the total, according to the BSP.

The BSP earlier projected foreign portfolio investment to register a net outflow of $1.1 billion at the end of the year.

For this year, the BSP is projecting portfolio investments to post a net outflow of $900 million.

Foreign portfolio investments are in the form of placements in publicly listed shares, government and private sector IOUs, and deposit certificates.

Portfolio investments are considered short-term bets because these placements may be pulled out quickly.

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