BSP: portfolio investments tripled in Q1

Portfolio investments, known as "hot" or speculative money, almost tripled in the first three months of the year to $989.02 million from $384.75 million a year earlier, the Bangko Sentral ng Pilipinas said on Thursday. In March alone, portfolio inflows totaled $245.39 million from only $76.04 million last year, drawn inward by the promise of higher returns on Philippine assets and brought to fruition when the BSP scaled up its policy rates by 25 basis points later in the month. The BSP raised on March 24 its borrowing and lending rates to 4.25 percent and 6.25 percent, respectively. According to the BSP, the rise in hot money inflows in March was due in part to a surge in investments in fixed-income government securities. "Registered investments increased to $1.6 billion or by 167.6 percent compared to only $580 million last year of which $767 million or 49.4 percent were in peso-denominated government securities, against only $99 million in 2010. "Jitters about the continuing protests and violence in the Middle East and North Africa redirected funds to peso government securities which offered comparatively higher yields on a regional basis," the BSP said on Thursday. Compared to February 2011, however, the net inflows in March were 54 percent lower than the $534 million recorded last month due to the devastating earthquake and tsunami that hit northeastern Japan, the BSP added. A little over 50 percent of total portfolio investments or $779 million were invested in stocks traded on the Philippine Stock Exchange, reflecting a 62 percent rise over the $481 million invested in local stocks last tear. The balance of $5 million was in money market placements and compared with zero hot money investments in March 2010. According to the BSP, the top five countries of origin for the hot money inflows were Singapore, the United Kingdom, Luxemburg and Hong Kong whose collective contribution to the hot money kitty equaled 89.3 percent of total. Gross outflows in March increased from year ago of only $504 million to $1.3 billion in March this year, consisting mostly of withdrawals from interim peso deposits. Gross outflows for the quarter also increased from $1.3 billion last year to $3.6 billion this year in the also form of withdrawals from interim peso deposits, the BSP said. — TJD/VS, GMA News