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Manila sees portfolio investments starting to pour in

Publication Date : 16-05-2014


A net inflow of foreign portfolio investments or “hot money” was recorded by the Philippines for the first time this year last April as financial markets stabilised, allowing fund managers to focus on the economic fundamentals of individual countries.

“The net inflow arose from investor optimism about the Philippine economy’s growth and strong quarterly corporate results, ignoring the possibility of a further cut in the United States Federal Reserve’s quantitative easing program,” the Bangko Sentral ng Pilipinas, the country's central bank, said in a statement.

A net inflow of $324 million in foreign portfolio placements was recorded in April, the BSP said.

This was a turnaround from the previous month’s net outflow of $92 million.

Portfolio investments, which are also called “hot money” for the speed they can enter and exit a country, refer to investments in publicly-traded shares, and peso denominated debt securities and deposit certificates.

A net inflow measures how much more money entered the country than went out.

However, BSP data released on Thursday showed that despite the improvement, the country was still way behind last year’s strong showing.

Last year, hot money inflows reached a record high of $4.22 billion. This year, the BSP expects this figure to be cut in half.

The BSP said while registered investments of $1.9 billion were lower by 12.1 per cent compared to the previous month’s $2.1 billion,
outflows declined to $1.5 billion from $2.2 billion in March 2014.

About 76.7 per cent of the investments went to PSE-listed securities (holding firms, property companies, banks, telecommunication companies and utilities) and 23.3 per cent to government securities.

The United States, Singapore, United Kingdom, Malaysia and Luxembourg were the top five investor countries for the month with combined share to the total of 78.8 per cent. The United States continued to be the main destination of outflows, receiving 80 per cent of total.


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