PH posted hot money inflows of $51.5m in April

FOREIGN fund managers opted to retain their investments in the domestic financial markets in April in reaction to the recent World Bank view that the Philippine economy will continue to be a top performer in the region.

Latest data from Bangko Sentral ng Pilipinas showed registered foreign portfolio investments or “hot money” in April posted a net inflow of $51.49 million, a reversal of the net outflows of $354 million a year ago and $459.86 million a month ago.

“This development may be attributed to investor reaction to the World Bank’s view that the Philippines will continue to be a top performer in the region, coupled with positive sentiment in anticipation of the country’s gross domestic product number for the first quarter of 2017,” Bangko Sentral said in a statement Friday.

The World Bank in mid April said the Philippine economy had the potential to expand by close to 7 percent in the next three years and remain one of the top performers in the region.

World Bank lead economist in the Philippines Birgit Hansl said growth was seen at 6.9 percent for 2017 and 2018, and 6.8 percent for 2019.

The consensus forecast of economists for GDP growth in the first quarter was around 6.8 to 6.9 percent. But the Philippine Statistics Authority said Thursday the economy only managed to grow 6.4 percent, slower than 6.9 percent a year ago in the absence of robust spending in the run-up to the national elections in May 2016.

Despite the slowdown, the first-quarter expansion was enough to outperform its peers in the region. It was also second to the 6.9 percent growth of China.

Total inflows of portfolio investments for the month reached $1.3 billion, offsetting the gross outflows of $1.26 billion. This brought hot money in the first four months to a net outflow of $516 million, a turnaround from the $56.26 million net inflow a year ago.

“International developments such as the US air strikes against Syria and increase in US interest rates continued to influence investments into the country,” the regulator said.

About 67.8 percent of investments in April went to securities listed in the Philippine Stock Exchange, 32 percent to peso government securities, and the balance to other peso debt instruments.

Singapore, US, United Kingdom, Malaysia, and Hong Kong were the top five investor countries for the month. The US remained the main destination of outflows, receiving 75.7 percent of total remittances.

Foreign portfolio investments are overseas funds that are temporarily invested in local stocks, government securities and money market. These are also called “hot money” because of the ease they are invested in and taken out of the local markets.