Net hot money inflow hits $308.7 million in January-February

By Lawrence Agcaoili (The Philippine Star) Updated March 14, 2010 12:00 AM

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) reported a net portfolio investment inflow of $308.7 million in the first two months of the year or almost 14 times the inflow of $22.6 million registered in the same period last year due to higher export earnings and additional government borrowings.

Data released by the central bank showed that BSP-registered foreign portfolio investments increased $286 million from January to February this year after the country’s merchandise exports jumped 42.5 percent in January.

“Net inflows were sustained due to news on higher export earnings, inspite of jitters about the coming elections and recent sovereign debt concerns in some European countries,” the BSP stressed.

Inflows surged 53.9 percent to $1.076 billion in the first two months of the year from $698.92 million in the same period last year. Major sources that accounted for about 83 percent of the total portfolio investments in January and February included the United Kingdom, the US, Malaysia, Luxembourg and Singapore.

On the other hand, gross foreign portfolio investment outflows climbed 13.5 percent to $767.73 million in the first two months of the year from $676.3 million in the same period last year due to withdrawals from interim peso deposits.

For the month of February alone, foreign portfolio investments posted a net inflow of $139 million, a complete reversal of the $198.73 million net outflow registered in the same month last year.

Portfolio investment inflows surged 154.2 percent to $500.39 million in February from $196.85 million in the same period last year.

Investments in shares being traded at the Philippine Stock Exchange (PSE) accounted for about 74 percent of the total inflows, followed by government securities with 18 percent, and peso bank deposits with minimum maturity of 90 days with eight percent.

On the other hand, outflows retreated 8.5 percent to $361.81 million in February from $395.58 million in the same month last year.

Registration of inward foreign investments with the BSP is voluntary. It entitles the investor or his representative to buy foreign exchange from authorized agent banks or their subsidiary/affiliate foreign exchange corporations for repatriation of capital and remittance of dividends/profits/earnings that accrue on the registered investment.

The Philippines shrugged off the global recession and posted a portfolio investments net inflow of $388.02 million in 2009, a complete reversal of the $1.784 billion outflow posted in 2008.

Inflows, the BSP data showed, amounted to $6.335 billion last year or 23.8 percent lower than the $8.321 billion inflows registered in 2008 while outflows fell 41 percent to $5.947 billion from $10.105 billion.