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Nearly $98M in ‘hot money’ enters PH in Jan

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Nearly $98M in ‘hot money’ enters PH in Jan

Net foreign portfolio investments worth almost $98 million entered the country in the first month of 2021, the Bangko Sentral ng Pilipinas (BSP) reported on Friday, citing recent political events in the United States and Covid-19-related developments as among the reasons.

Central bank data showed that net inflows of these investments, or “hot money” — so called because of how easily these go in and out of the economy — reached $97.92 million in January, a turnaround of December’s $523.86-million net outflows.

The latest amount — the biggest since November’s $226.75-million inflows, but still lower than the year-earlier’s $486.10 million — resulted from $951.61 million in inflows and $853.70 million in outflows.

“The $952-million registered investments for January reflected a 12.2-percent decline [from] the $1.1 billion recorded in December 2020 (or by $132 million),” the central bank said in a statement.

Year-on-year, registered investments were 23 percent smaller than the $1.23 billion in January 2020, it added.

Of these investments, the bulk — 62.1 percent — were placed in Philippine Stock Exchange (PSE)-listed securities: banks; holding firms; property companies; food, beverage and tobacco corporations; and transportation services firms. The remaining 37.9 percent were invested in peso government securities.

The United Kingdom, Singapore, United States, Luxembourg and Hong Kong were the top foreign investors last month. Their investments made up 83.4 percent of the total.

“Outflows for the month ($854 million) were lower [than that] recorded for December 2020 ($1.6 billion) by 46.9 percent (or by $754 million). The US received 71.7 percent of total outflows,” the BSP said.

Gross outflows were also 50.4 percent lower than the $1.72 billion outflows a year ago.

The Bangko Sentral said developments in the month included the January 6 siege of the US Capitol by supporters of former president Donald Trump that left a police officer and four others dead and many more injured; the US Congress’ confirmation of Democrat Joe Biden as America’s 46th president; and local reports confirming the presence of the new coronavirus strain that first emerged in the United Kingdom.

It also traced the net inflows to the emergency-use authorization granted by the Food and Drug Administration for two Covid-19 vaccines; other vaccine-rollout policies; and investors’ response to Fitch Ratings’ retention of the country’s “BBB” investment grade rating with a stable outlook.

Last year, the country posted $4.24 billion in net hot money outflows, wider than the $1.90 billion that left the country in 2019.

This year, the central bank projects $3.5 billion in hot money.