The Manila Times

$1.35 billion in‘hot money’ enters Philippines in April

MAYVELIN U. CARABALLO

NET “hot money” inflows reached $1.35 billion in April, the highest level in 11 years, according to data from the Bangko Sentral ng Pilipinas on Friday.

Gross foreign portfolio investment inflows of $2.18 billion outpaced outflows of $823.32 million in that month. Net inflows were last greater in November 2010, when they reached $1.67 billion.

Year on year, net inflows were a turnaround of the $373.95 million recorded in April 2021.

Registered investments were $2.18 billion, up 70.7 percent, or $903 million, from $1.3 billion in March. It was 234.9 percent higher, or $1.5 billion, than the $651 million in April 2021.

The majority of funds flowed to securities listed on the Philippine Stock Exchange, primarily shares in utilities, energy, power and

water; banks; holding companies; property; and transportation services.

With a combined share of 94.3 percent, Singapore, the United Kingdom, the United States, Hong Kong and Luxembourg were the top five investor countries.

Total outflows in April were $823.32 million, down 48 percent or $759 million from the previous month. The United States took 61.4 percent of the total. When compared to the previous year’s $1 billion, it was smaller by 19.7 percent ($202 million).

Net inflows were P857.44 million in the first four months of this year.

The central bank anticipates $4 billion in net inflows this year, bolstered by anticipated initial public offerings.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., attributed the net inflows to the economy’s continued reopening toward greater normalcy.

He also attributed the latest hot money data to the recent approval of reform measures aimed at further liberalizing/easing foreign ownership restrictions in the country, such as amendments to the Public Services Act, Foreign Investments Act and Retail Trade Liberalization Law, which he believes will attract more foreign investment.

“Market sentiment also supported by generally better local economic data recently as bright spots for the economy . . .,” Ricafort added.

Increased fund-raising/investment banking activity, he continued, may have boosted foreign portfolio investment data in recent months and may continue to do so in the future, given the increased number of upcoming investment banking agreements in the pipeline.

Measures to further reopen the economy, increased government spending, especially on infrastructure, election-related spending, the Corporate Recovery and Tax Incentives for Enterprises that is country’s largest stimulus measures so far for the coming years, and the still relatively accommodative monetary policy, Ricafort underscored, are major economic drivers for the rest of 2022 that could support foreign portfolio investments data.

Offsetting risk factors for the coming months, he emphasized, include the Russia-Ukraine war, which has pushed global oil prices above $100 per barrel; increased Russian sanctions; as well as many global companies deciding to stop doing business within Russia, which could be a drag on valuations, increased global risk aversion and some fund shifts to safe assets; and the widely expected US Federal Reserve rate hike.

Business Times

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2022-05-28T07:00:00.0000000Z

2022-05-28T07:00:00.0000000Z

https://digitaledition.manilatimes.net/article/281827172389897

The Manila Times