Portfolio funds reverted as net investment flows in January

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Short-term foreign investments, also called “hot” money transactions, started the year on a positive note in January as net outflows two months prior fortunately reverted to net inflows instead.

The Bangko Sentral ng Pilipinas (BSP) said on Thursday foreign portfolio investments (FPI) during the month yielded net inflows totaling $301 million.

There was an outmigration of portfolio funds in January last year totaling $130 million, and another outflow of $315 million last December.

FPI are typically labeled as hot or “speculative” money because they easily pulled in and out of investment platforms at the slight change of overseas or local sentiment.

The BSP traced the positive January development to market optimism over the short term and to positive investor reaction to the continued 6.6-percent expansion of the economy in the fourth quarter of 2016.

Among country sources, the United Kingdom, the United States, Singapore, Luxembourg, and Hong Kong were the top 5 investor countries for the period. The five countries accounted for a combined 79.6 percent share to the total hot money placements
for the month.

The US  continued to be the destination of choice for outbound portfolio funds equal to 89.3 percent of total remittances.

In terms of type of instrument, the BSP said 95.4 percent of portfolio investments during the month were for the purchase of securities traded at the Philippine Stock Exchange (PSE), particularly banks, holding firms, property companies, food, beverage and tobacco firms, and utilities companies.

Peso government securities, meanwhile, comprised 3.4 percent of the investment portfolio, while the balance of 1.2 percent was in other peso debt instruments.

Transactions in peso government securities and peso time deposits resulted in net outflows of $42 million and $31 million, respectively.

Meanwhile, net inflows were seen for other instruments.

In particular, PSE-listed securities yielded a net inflow of $360 million while other instrument were at $13 million.

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Bianca Cuaresma graduated cum laude from the University of Santo Tomas (UST) with a degree in AB Journalism. She was with the BusinessMirror during her internship in 2012 where she was assigned at the Department of Foreign Affairs (DFA) beat. She continued to be of service to the paper after she graduated in 2013. In 2014, she was awarded as the Reporter of the Year by the paper for her coverage in the Bangko Sentral ng Pilipinas (BSP). She is a BusinessMirror reporter for 3 years now, and has covered general assignments and agencies related to banking and finance in the country.