Net 'hot money' flows ease but stay positive

NET foreign portfolio investments remained positive for a third straight month in August but were significantly lower compared to July, the Bangko Sentral ng Pilipinas (BSP) reported late on Thursday.

Foreign investment transactions registered with the BSP through authorized agent banks — also called «hot money» given the ease by which the funds can be taken in and out of an economy — posted a net inflow of $153 million.

This was smaller compared to July's net inflow of $962 million but reversed from the year-earlier net outflow of $86.29 million.

Gross inflows for the month totaled $1.4 billion while outflows came in at $1.3 billion.

The inflows were 8.6 percent lower compared to July's $1.6 billion while the outflows were 109.5 percent up from $617 million.

The funds were mostly invested in Philippine Stock Exchange-listed securities (74.2 percent) — mainly banks, property, holding firms, food, beverage and tobacco, and transportation services — while 25.8 percent went to peso government securities and in other instruments (less than 1.0 percent).

Most of the short-term investments came from Japan, the United Kingdom, the United States, Luxembourg and Singapore with a combined share of 88.9 percent.

As for the outflows, 59.2 percent went to the US.

Year on year, gross inflows climbed by 82.0 percent from $791.6 million while outflows grew by 46.6 percent compared to the year-earlier $877.8 million.

Year-to-date transactions were also positive at a net $311 million, albeit smaller compared to the $589 million recorded in the same period last year.

The BSP figures account for funds received by AABs. Registration is only required if the investor or its representative purchases foreign exchange from AABs or their subsidiaries/affiliates for the repatriation of capital and remittance of earnings from the registered investment.

«Without such registration, the foreign investor can still repatriate capital and remit earnings on its investment, but the FX (foreign exchange) will have to be sourced outside the banking system,» the central bank noted.