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Friday, March 29, 2024

Hot money inflows hit $1.1-billion in March, highest in 3 years

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Foreign portfolio investments or ‘hot money’ posted a three-year high net inflow in March on strong confidence in the country’s macroeconomic fundamentals, the Bangko Sentral ng Pilipinas said Thursday.

Data from the Bangko Sentral showed that foreign portfolio investments yielded a net inflow of $1.132 billion in March, a sharp turnaround from the $460-million net outflow a year ago.

It was also a reversal of the $545-million net outflow in February and brought hot money in the first quarter to a net inflow of $749.43 million, compared to a $567-million net outflow in the same period last year.

The net inflow in March was the highest in more than three years since it registered a $1.19-billion net inflow in February 2015.

Gross inflows in March climbed to $2.468 billion from $1.373 billion a year ago, while gross outflows went down to $1.336 billion from $1.833 billion.

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About 50.6 percent of investments in March were in other peso debt instruments, while 40.9 percent were in securities listed in the Philippine Stock Exchange, pertaining to holding firms, property companies, banks, food, beverage and tobacco firms and utilities companies.

The 8.5 percent balance went to peso government securities. The Netherlands, the United Kingdom, the United States, Norway and Hong Kong were the top five investor countries in March.

The Philippine government raised 1.46 billion renminbi or around $230 million (P12 billion) from the sale of Panda bonds in China in March.

The Bureau of the Treasury said the order book for the issuance reached 9.22 billion renminbi or 6.22 times the issue size of 1.46 billion renminbi.  The bonds fetched a coupon of 5 percent “or 35 basis points over the two-year Chinese bond rate of 4.65 percent.”

Foreign fund managers withdrew their investments from the domestic financial markets in February on profit taking and in reaction to the possibility that the US Federal Reserve might increase interest rates.

Foreign portfolio investments are also called ‘hot money’ because of the ease they are invested in and taken out of the domestic financial markets.

Hot money posted a net outflow of $205 million in 2017 as the total withdrawals of $16.267 billion offset the gross inflows of $16.062 billion, affected by global uncertainties such as geopolitical concerns and the anticipation on the next policy moves by the US Federal Reserve.

The Bangko Sentral expects hot money to post a net outflow of $900 million this year.

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