Net hot money surges 280% in 1st 7 mos. – BSP

Foreign portfolio investments in stocks and government debt securities surged to $10.49 billion in the first seven months of 2011, resulting in net inflows of $2.66 billion. The result was 280 percent in net inflows year-on-year, the Bangko Sentral ng Pilipinas (BSP) said Thursday. BSP data showed investors channeled nearly $5 billion to shares traded on the Philippine Stock Exchange. Holding firms attracted the most “hot money" worth $1.4 billion. Bank shares drew $969 million worth of portfolio funds while property developers got $813 million. Telecommunications firms soaked up $713 million and utilities firms absorbed $679 million of hot money. $4B in government securities Investors also placed $4 billion in peso-denominated government securities, or more than triple the $1.2 billion invested in short-term and longer-dated Treasury bills and bonds in the same comparable period. Minor categories of hot money investments were peso time deposits worth $293 million, unit investment trust funds worth $6 million, and money market instruments worth $6 million. The bulk of foreign funds came from Singapore, UK, US, Luxembourg, and Hongkong. The money from these countries accounted for 89.4 percent of total inflows. BSP officials said they are closely watching liquidity levels and foreign exchange transactions for inflation pressures as foreign capital flows continued to surge. Among the recent BSP policy moves to curb inflation were the 21 percent reserve requirement for banks and higher overnight borrowing and overnight lending rates at 4.5 percent and 6.5 percent, respectively. — ELR/VS, GMA News