Hot money inflows hit 14-month high of $225-m in August

The Bangko Sentral ng Pilipinas (BSP) said the net inflow of foreign portfolio investments or "hot money inflows," hit a 14-month high in August. BSP Governor Amando Tetangco Jr. said hot money posted a net inflow of $225.06 million in August, a complete reversal of the net outflow of $82.91 million in August last year. The BSP sees inflows of "hot money" hitting $2.9 billion this year, or 747 percent higher than the $388.02 million registered in 2009. The unexpected economic growth in the first half of the year and the strengthening of the peso against the US dollar spurred the record inflows, the BSP said. This was the highest monthly net inflow of foreign portfolio investments in 14 months of since May 2009 when the BSP booked a net inflow of $497.58 million. "The global optimism led by strong manufacturing data in the United States and China, backed by the robust second quarter growth rate of 7.9 percent and the stronger peso, contributed to the positive investor outlook for the Philippines," Tetangco said. The country's gross domestic product (GDP) posted a surprising growth of 7.9 percent in the first half of the year. The GDP was only 1.2 percent in the same period last year. The GDP also expanded by 7.9 percent in the second quarter from 7.8 percent in the first quarter of the year. Data showed that inflows of foreign portfolio investments more than doubled to $787.9 million in August. Inflows in the same month last year were only $383.96 million. On the other hand, outflows jumped by 20.3 percent to $562.84 million from $467.87 million. For the first eight months of the year, Tetangco said the net inflow of foreign portfolio investments reached $960.27 million. This figure is $778.08 million higher than the inflow of $182.18 million registered in the same period last year. Data showed that inflows of foreign portfolio investments surged by 46 percent to $5.88 billion from January to August. In comparison, inflows were only $4.024 billion in the same period last year. Outflows increased by 28.05 percent to $4.92 billion from $3.842 billion. Tetangco attributed the increase to the steady rise in investments in shares of stocks listed at the Philippine Stock Exchange (PSE). He also cited the the continued rise in inflows from the business process outsourcing (BPO) sector and the robust overseas Filipino remittances. He said investments in PSE-listed shares rose by 32.2 percent to $4.1 billion in the first eight months of the year. Shares were only at $3.1 billion in the same period last year. The major beneficiaries, he said included: * banks with 24 percent; * property companies with 20 percent; * telecommunications companies with 19 percent; * holding firms with 17 percent, and * utility firms with 11 percent. The major sources of foreign portfolio investments inflows include the US , the United Kingdom, Singapore, Malaysia, and Luxembourg . The Philippines shrugged off the global recession and posted a portfolio investments net inflow of $388.02 million in 2009. This is a complete reversal of the $1.784 billion outflow posted in 2008. Inflows amounted to $6.335 billion last year. This figure was 23.8 percent lower than the $8.321 billion inflows registered. Outflows, on the other hand, fell by 41 percent to $5.947 billion from $10.105 billion. For this year, monetary authorities see foreign portfolio investments growing by more than seven folds this year despite the higher risk brought about by the debt crisis in Europe. –VVP/OMG, GMANews.TV