Jan.-Aug. 'hot money' helps RP stocks — BSP

Foreign portfolio investments or hot money poured into Philippine stocks and debts to the tune of $883.4 million or close to P40 billion in the first eight months of the year, the central bank reported over the weekend. The Bangko Sentral ng Pilipinas (BSP) said that the Jan.-Aug. figures reflected a 385-percent increase from the 2009 comparable period. The money was coming into the country attracted by the macroeconomic environment of the Philippines that is presently positive. “The stock market is going up because of foreign funds coming in and they are also going to the fixed income markets," BSP Gov. Amando Tetangco Jr. said. The Philippine Stock Exchange index soared to an all time Thursday, gaining 97.98 points or 2.56 percent to close at 3,902.56. Analysts said foreign funds in search of better returns outside Wall Street and other traditional markets still reeling from the global financial crisis were fueling the stock market. Good economic performance “Because of the good economic performance of emerging markets there are inflows going to these markets, including the Philippines," Tetangco said. "That is why the stock market is going up because of the foreign funds coming in [even as] the funds are also going to the fixed income markets." The increasing amount of remittances by overseas Filipino workers and stable investments in the country’s business process-outsourcing industry are helping country’s gross international reserves (GIR) to expand that it would likely total $50 billion by the end of the year, Tetangco said, referring to the newly adjusted GIR numbers. The GIR amounted to $49.6 billion as of end-August or $400 million shy of the full year forecast. The BSP chief said the relative weakness of the US dollar in the previous months allowed the Bangko Sentral to expand its foreign reserves. This pushed the BSP to intervene in the foreign exchange market by buying US dollars as part of its mandate to keep the rate from fluctuating at a disturbing pace. “But our participation in the forex market has always been symmetrical. We participate to reduce or minimize or smoothen the exchange rate fluctuations. That is why our [gross international reserve] is getting bigger," Tetangco said. —JE/VS, GMANews.TV