Hot money inflows more than double in 1H

HOT money inflows grew more than two-fold in the first six months of the year on the back of continued investor risk appetite in Philippine securities and fixed income investments, the central bank said on Thursday.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said foreign portfolio investments yielded a net inflow of $9.1 billion in the first semester, surging 106 percent from the $4.4 billion a year ago.

In June alone, hot money transactions resulted in net inflows of $354 million or three times higher than the $86 million outflows in the same month in 2010.

BSP Governor Amando Tetangco Jr. said the continued flow of capital into the country was attributed to the strong interest in government securities and fixed income investments buoyed by the overall positive outlook on emerging markets like the Philippines.

Government securities issued during the first half of the year reached $4.2 billion, comprising 45.5 percent of the total registered investments, or three times higher than the $999 million in 2010 owing to interest rates differentials in favor of emerging markets, especially for longer tenors, the BSP said.

Investments in stocks registered at the Philippine Stocks Exchange aggregated $4.7 billion, up by more than half from the $3 billion in the same six-month period last year.

In June alone, investments in PSE-listed shares totaled $726 million, accounting for more than half of the total registered investments and 55 percent higher than a year ago.

The BSP noted that combined investments in PSE-listed shares and peso government securities comprised 96.7 percent of total registered investments.

The balance of registered investments was in peso time deposits, unit investment trust funds and money market instruments.

Outflows for the first half of the year amounted to $6.8 billion and were mostly withdrawals from interim peso deposits. In June alone, outflows reached $1 billion, up 11.9 percent from a year ago.

Registration of foreign investments with the BSP is voluntary. It entitles the non-resident investor or their representative to buy foreign exchange from authorized agent banks or their subsidiary/affiliate foreign exchange corporations for repatriation of capital and remittance of related earnings.

Major beneficiaries were holding firms, banks, telecommunication companies, property firms and utility firms.