Hot money inflows in first half up 245 percent

Net inflow of registered foreign portfolio investments for the first half of the year went up by 245 percent on the back of stable financial markets and strong corporate earnings among several factors, according the central bank. The Bangko Sentral ng Pilipinas (BSP) said Friday that registered foreign portfolio investments or "hot money" reached $687 million from January to June this year, up by $415.26 million from the same period last year. Monetary authorities attributed the steady flow of foreign portfolio investments into the country to the stable financial markets, robust corporate earnings, strong peso, rise in US stock market, bouyant Asian markets, and stronger-than-expected gross domestic product growth of 7.3 percent in the first quarter of the year.

However, gross foreign portfolio investment outflows went up by 25.5 percent to $3.668 billion from January to June compared to $2.921 billion in the same period last year. For the month of June alone, foreign portfolio investments posted a net outflow of $85.84 million from a net outflow of $77.09 million registered in the same month last year. Portfolio investment inflows increased by 79.5 percent to $809.36 million last month from $450.82 million in the same month last year while outflows went up by 69.5 percent to $895.19 million from $527.91 million. "This resulted from investors concern on the Euro zone problem, the negative economic outlook in the US and China, compounded by the government's deficit of P162.1 billion for the first five months of the year," the BSP said. The Philippines shrugged off the global recession and posted a portfolio investments net inflow of $388.02 million in 2009, a complete reversal of the $1.784 billion outflow posted in 2008. Inflows amounted to $6.335 billion last year or 23.8 percent lower than the $8.321 billion inflows registered while outflows fell by 41 percent to $5.947 billion from $10.105 billion. For this year, monetary authorities see foreign portfolio investments increasing more than seven folds this year despite the higher risk brought about by the debt crisis in Europe. The BSP sees inflows of foreign portfolio investments or "hot money" hitting $2.9 billion this year or 747 percent higher than the $388.02 million posted in 2009. —JE/OMG, GMANews.TV