BSP: Net ‘hot money’ totaled $2.4B in 10 mos.

Net foreign portfolio investments or “hot money" in January-October rose by almost seven times to $2.461 billion, the Bangko Sentral ng Pilipinas (BSP) said Thursday. In October alone, $1.04 billion in hot money entered the country, an amount eight times over last year’s $129.16 million, the central bank said in a statement. The surge in hot money can be traced to the continued flow of capital funds to emerging markets like the Philippines, from developed economies in Europe and the US, BSP Gov. Amando Tetangco Jr. said. The gross amount of portfolio investments in the first ten months totaled to $8.91 billion, almost 64 percent more than the $5.44 billion recorded a year earlier. More than $6.6 billion of the gross amount were invested in the Philippine stock market, compared with the $4.2 billion recorded a year earlier. The BSP said that foreign investors took positions largely in banks and property companies, with each sector receiving $1.4 billion in the first nine months. Foreign portfolio managers also picked stocks in telecommunications ($1.1 billion) and utility firms ($683 million), according to the central bank. About $2.3 billion were also invested in peso-denominated government securities, peso time deposits, and other domestic market instruments. Foreign fund managers that took positions in the Philippine markets came mostly from the US, UK, Singapore, Luxembourg, and Hong Kong, which collectively accounted for 79 percent of the total placements. Still, Tetangco said he prefers foreign funds in the form of foreign direct investments for the Philippines. Such investments are long-terms placements in brick-and-mortar enterprises that generate employment and tax revenues for the government. Hot money, on the other hand, can be withdrawn practically anytime investors decide to do so. Portfolio investment indicate how foreign investors regard the country as an investment destination, Tetangco said. — JE/VS, GMANews.TV